The Indonesian Bakery Association (APEBI) demanded Friday the government scrap 10 percent value-added tax (VAT) on imported wheat to help revive the country's bakery and pastry businesses as global economic slump undermined people's purchasing power.
"We want the government to participate in helping out the bakery sector, especially the small-scale ones," APEBI chairman Chris Hardijaya said.
The government has slapped back VAT on imported wheat as of Jan. 1 after waiving it in the middle of last year in response to skyrocketing commodity prices.
According to Chris, the VAT had now caused flour prices to jump by 10 percent as compared to last December.
Currently, flour prices vary from around Rp 100,000 (around US$9) to Rp 150,000 per sack or around 25 kilograms.
"Our concern is the small-scale bakeries cannot keep up with the rising prices," said Bogasari flour company director Franciscus Welirang.
According to the association, there are around 120,000 bakery businesses throughout the nation, 55 percent of which are micro-scale firms making less than Rp 25 million sales per month, 30 percent are small firms recording less than Rp 200 million, 10 percent middle-size bakeries making less than Rp 4 billion a month, and the remaining 5 percent are large bakeries with over Rp 4 billion in sales per month.
"Each year, there is usually some 10 percent rise on the number of bakeries, which include those making traditional snacks," said Chris.
Flour prices rose by 100 percent last year, he added, while small-scale firms could only afford to raise their prices by 20 to 25 percent.
"Now that the prices are going down, these bakeries are supposed to expand their business until the VAT burden their production cost again," said Franciscus.
He suggested the government not to impose the VAT at a time when the prices and the rupiah exchange were still fluctuating.
Indonesia imports wheat from countries such as Australia, and ready-made flour mostly from Bogasari wheat processing plant in Singapore.
From October 2007 to the same month last year, the nation imported 4.3 million tons of flour. (dis)
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