Cacao producers urge govt to lobby China on tariffs

Zakki P. Hakim, The Jakarta Post, Jakarta

The Indonesian Cacao Association (Askindo) has officially asked the government to lobby China to cut tariffs imposed on Indonesian cacao beans and cacao products to close to zero percent.

"We sent our written request directly to the minister of trade about a month ago, but so far we have not received any response," Askindo Jakarta chairman Piter Jasman told The Jakarta Post on Sunday.

Piter said the government should have lobbied the Chinese government during the recent visit of Chinese President Hu Jintao to the country.

According to Piter, Malaysian cacao products enjoyed a practically zero import tax this year, while Indonesia had to pay an averaged of 10 percent on cacao products at least until 2007.

Earlier, Askindo said Indonesian was unable to compete with Malaysia on the Chinese market.

Piter went on to say that China was a lucrative market, with demand reaching 50,000 tons last year to make products such as cocoa powder and butter.

"The demand grows 20 percent annually," he said.

Indonesia last year exported 94,058 tons of cacao products, slightly up from 2003's 92,770 tons.

Malaysia has a relatively limited production and exports of cacao beans, thus it imports the commodity from Indonesia and later profits by exporting the processed cacao products.

Indonesia's total cacao beans exports last year reached 277,060 tons worth $370.24 million, with Malaysia absorbing almost half of the total exports.

Malaysia's cacao beans and products enjoy zero import tax under the Early Harvest Program (EHP) -- a tariff cut package preluding the implementation of a Free Trade Agreement between China and the Association of Southeast Asian Nations (ASEAN).

Under the EHP, China and ASEAN country members are obliged to slash tariffs on farm goods to 10 percent or lower starting Jan. 1, 2004 and zero percent from Jan. 1, 2006.

According to data from the Ministry of Trade, Indonesia has listed only one group of cacao products, namely "cocoa powder, containing added sugar or other sweeteners" in the program.

Malaysia, meanwhile, listed cacao beans and five other cacao products.

It was not immediately clear why Askindo received no response from the Ministry of Trade.

However, Ministry of Trade's deputy director for inter- and intra-regional cooperation Retno Kusumo Astuti said earlier that in all FTA negotiations the government would always first ask for input from the private sector.

Separately, Ministry of Agriculture's subdirectorate for food crops international marketing head Donna Gultom said that FTA negotiations had became more and more complicated, thus both the government and private sector should be more active in anticipating such a scenario.

"The private sector has been somewhat ignorant, and reluctant to open up the domestic market at the expense of losing export markets. Meanwhile, the government could have been more active in raising private sector awareness," she told the Post.