Food producers more concerned about levies and bribes: GAPMI

Adianto P. Simamora, The Jakarta Post, Jakarta

Local food producers have voiced concerns over the numerous levies in the regions and rampant extortion by government officials, which they say have increased their production costs and will leave them unable to compete with imported food products in the upcoming ASEAN free market era.

Thomas Darmawan, chairman of the Indonesian Food and Beverages Association (GAPMI), said that in anticipation of the implementation of the ASEAN Free Trade Area (AFTA), local food producers were mostly concerned about the levies and extortion, rather than the low duties that would be imposed on imported food products.

"As far as import duties are concerned, we have long been prepared for AFTA. Only 13 percent of food products still have an import duty of more than five percent, while the remaining 87 percent have had an import duty of less than five percent since January 1998.

"What we are more concerned about are the numerous levies imposed by regional administrations and the bribes that we have to pay to secure our business," Thomas told The Jakarta Post on Friday.

Under the AFTA agreement, the six founding members of the Association of Southeast Asian Nations (ASEAN) -- Indonesia, Singapore, Malaysia, Thailand, the Philippines and Brunei Darussalam -- have to reduce their import duties on food products to between zero and five percent.

The new ASEAN member countries of Vietnam, Laos, Cambodia and Myanmar, meanwhile, have until between 2006 to 2010 to open up their markets.

Thomas said local food producers had been familiar for a long time with levies imposed by the regional administrations and bribery practices.

But the number of regional levies and the amount of bribes demanded by government officials have been on the rise since the implementation of the autonomy law.

"Don't be surprised when, for instance, in Jakarta a kilogram of oranges from Medan is more expensive than those imported from other countries," he said.

He said traders who wanted to ship their oranges from Medan to Jakarta could spend huge amounts of money on levies and bribes to ensure the fruit arrived safely in Jakarta.

"Along the route from Medan to Jakarta, one truck could pass at least 14 weighing stations that each demand a levy of Rp 20.000, and 28 subdistrict stations that each demand a levy of Rp 5000," he said.

Aside from these "legal payments", Thomas said, the truck drivers also had to pay bribes to various groups of people along the route to Jakarta in order to avoid trouble.

He refused to identify these groups, but industry sources said they were police and thugs.

"We have been burdened by high transportation costs and this makes it difficult to reduce the price of our food products," he said.

Tony J. Kristianto, secretary general of the Agri-business Club, also voiced concerns over the situation, saying it would reduce local companies' competitiveness.

"The government should coordinate with local food industries to remove these non-tariff barriers and make them competitive in the AFTA era," he told The Post.

According to the association's data, there were 916,184 food producers with a total of 3.15 million employees in 2000.

Indonesia exported US$955 million worth of processed food products last year.