Dependency on sugar import dangerous: HKTI chairman

JAKARTA (JP): The Indonesian Association of Farmers (HKTI) urged the government to raise sugar import duty from the present 25 percent to help speed up the process of Indonesia becoming self-sufficient in the commodity.

HKTI chairman Siswono Yudohusodo was quoted on Saturday by Bisnis Indonesia as saying that the money collected from the import duty could finance the construction of new sugar mills that would boost domestic production.

"If import duty is set above 50 percent, within one year we could build a sugar mill with a capacity of processing 12,000 tons of cane a day," he said. "And with import duty of around 80- 90 percent, we can quickly become self sufficient."

The cost of building a sugar mill capable of processing 10,000 tons of cane a day is estimated at $240 million.

According to the Indonesian Sugar Association, Indonesia is the world's eighth largest sugar consumer with annual consumption of about 3.36 million tons per year.

Indonesia currently produces 1.4 million tons of sugar a year.

"The current dependency of 1.86 million tons on imported sugar each year is dangerous," Siswono said.

Indonesia buys 13 percent of the 14 million tons of sugar sold in the free markets, making it the second largest buyer after Russia. Another 14 million tons of the world's sugar trade is sold under bilateral arrangements.

The 25 percent duty was imposed in January by the government to protect local farmers and producers against cheaper imports after negotiations with the International Monetary Fund (IMF).

The sugar association said the duty had not prevented imports from flooding the local markets and had proposed that it be raised to 95 percent.

Indonesia has one of the lowest sugar import duties in the world. European countries set an import duty of between 240 percent and 288 percent, in South Africa the duty is 124 percent, Thailand 104 percent, and the Philippines 133 percent. (10)