Experts welcome import tariff on rice

Experts welcome import tariff on rice

JAKARTA (JP): Analysts hailed the government's plan on
Thursday to impose an import duty on rice in bid to protect local
farmers.

Sulastri Surono of the University of Indonesia's Institute for
Economic and Social Research (LPEM-UI) said the government should
not totally liberalize the country's rice trade.

"Adopting a free market policy during economic crisis will
only benefit consumers," she said on a seminar on farming,
natural resources and the social impact of Indonesia's economic
problems.

She said protection is especially needed when the rupiah
strengthens to less than Rp 7,500 to the U.S. dollar.

She said when the rupiah exchange rate rose to Rp 7,500
against the U.S dollar in December, the price of medium grade
local rice was Rp 2,750 per kilogram, higher than Rp 2,181 for
imported rice of the same quality.

Sulastri said that imposing an import tariff on rice would not
embarrass the government because the World Trade Organization
allows Indonesia to impose import duties of up to 180 percent
until the year 2003.

"I think what we need is just a 30 percent import tariff. That
will be enough to protect the local farmers," she said in the
seminar.

H.S Dillon of the Center of Agriculture Policies Studies told
The Jakarta Post that import duties should be a temporary
solution to protect farmers from the falling domestic price of
rice.

The drop in the value of rice was partly due to the sharp
increase in the procurement of imported rice, he said, adding
that the State Logistics Agency (Bulog), as a consequence could
not make bigger purchases in the local market.

The country liberalized rice imports last year to counter the
surging rice prices in the local market as part of its September
agreement with the International Monetary Fund.

Starting Sept. 22, private companies were permitted to import
rice with having to pay import duties.

State Minister of Food Affairs and Horticulture AM Saefuddin
said on Tuesday that Indonesia and the World Bank are at odds
over the size of the new import tariff, with Indonesia seeking up
to 30 percent and the World Bank 5 percent.

"I think (a 5 percent import tariff) will not protect our
farmers. The ideal increase would be around 20 to 30 percent," he
said.

He said the planned import tariff was currently being
negotiated by government ministers and the IMF and the World
Bank, without giving further details.

Minister of Trade and Industry Rahardi Ramelan was quoted by
Antara as saying on Wednesday that he supported the idea of an
import duty on private companies.

"It should be imposed on private companies because they can
flood the market with rice. Bulog (The State Logistics Agency),
although will still import rice, will postpone new deliveries to
protect farmers," he said.

But Peter Warr of the Australian National University said that
if Bulog was exempted from the import tariff, the new policy
would create a big margin for the agency within which it could
manipulate the domestic prices.

Meanwhile, Bungaran Saragih of the Bogor Institute of
Agriculture (IPB) said the government must do all it can to keep
rice prices from falling below the official floor price so
farmers are protected from unfavorable market conditions.

But he ruled out the introduction of the import tariffs in
dealing with the falling prices at home, adding that Bulog has
committed itself to stabilizing rice prices and this should be
maintained at all costs.

"This is a promise the government must keep. There should be
no excuse, such as lack of funds, for them not to do it. That's
only fair," he said. (gis)