Flour producers seek exclusive import rights

JAKARTA (JP): Local flour producers called on the government on Thursday to give them sole import rights in order to stay afloat amidst stiffer competition from abroad, Antara reported.

Bustanil Arifin, president of PT Sriboga Ratu Raya Flour Mills, said such exclusive rights should be given unless the government agreed to producers' demand for a 30 percent import duty to stem dumping practices.

The rights could be given to small producers who have been hurt by the unfair competition from imports, Bustanil, a former chairman of the State Logistics Agency (Bulog), said.

"We cannot compete against cheap imports, and we cannot repay our bank loans," he said.

Sriboga, based in Semarang, Central Java, is one of three small flour producers in the country with an annual capacity of 400,000 tons. The other two are PT Panganmas Inti Persada Flour Mills in Cilacap, Central Java (300,000 tons) and PT Berdikari Sari Utama Flour Mills in Makassar, South Sulawesi (400,000 tons). The local wheat flour industry is dominated by PT ISM Bogasari with an annual capacity of 3.6 million tons from its two mills in Jakarta and Surabaya, East Java.

The four producers last week called on the government to impose a countervailing duty against imports from France, Germany, Belgium, Australia and the United Arab Emirates.

The national anti-dumping committee is currently looking into the allegations and is expected to make a ruling in three months.

Bustanil was pessimistic that the government would agree to the duty proposal because the International Monetary Fund (IMF) had already rejected it, according to Antara.

"Small producers could close down and the IMF does not care," he said.

Indonesian flour mills rely on imported wheat, mostly from Australia, Canada and the United States.

Bulog lost its monopoly right to import wheat, along with the elimination of state subsidies in 1998. The government also slashed import duty on flour to zero.

The market liberalization since then has led to rising flour imports and declining wheat imports.

Wheat imports declined to 3.4 million tons in 1998 from 3.6 million tons in 1997 and 4.1 million in 1996. Flour imports rose to 24,000 tons in 1998 from 15,200 tons in 1997. (10)