Government determined to destroy hundreds of tons of smuggled sugar

Abdul Khalik, The Jakarta Post, Jakarta

The government is going ahead with plans to destroy hundreds of tons of smuggled sugar despite pleas from national legislators and others that the sugar be distributed to the needy.

Minister of Agriculture Bungaran Saragih said on Wednesday the 167 containers of smuggled sugar would be destroyed on Thursday (today) as a lesson to smugglers.

To show the government is serious commitment about combating sugar smuggling, President Megawati Soekarnoputri would participate in the destruction, he said.

"There is no proof of ownership of the sugar and the Indonesian Sugar Council (DGI) believes the move will serve as a warning to smugglers. The President will symbolically destroy an amount of sugar tomorrow afternoon," Bungaran said.

The containers, holding 3,674 tons of sugar, were among 179 containers confiscated by Jakarta customs officers last month. The sugar was smuggled in from Port Klang in Malaysia to Belawan Port in Medan, North Sumatra, before being shipped to Tanjung Priok, Jakarta.

Several top officials and the Minister of Industry and Trade, Rini MS Soewandi, had repeatedly insisted all illegal sugar had to be destroyed so as not to put the price of local sugar under further pressure due to oversupply.

However, the destruction was delayed for almost a month because several parties, including some members of the House of Representatives, wanted the sugar to be distributed to the needy.

Chairman of economic think-tank the Institute for the Development of the Economy and Finance (Indef) Bustanul Arifin said all the sugar should be destroyed at once.

"If only small amount of sugar is destroyed (in a public ceremony) this will not serve as an effective deterrent. The smugglers will realize the government is just bluffing," he said.

Bungaran said his ministry and the DGI had formed a special task force to discuss ways to eradicate smuggling. The task force would come up with a practical solution to fight smuggling in a week, he said.

The DGI comprises top officials from various ministries and businessmen. The group had good funding from businesses to fight the smuggling, Bungaran said.

So far, the government has failed to stop the widespread smuggling of cheap sugar into the country, which has flooded the local market and hurt sugarcane farmers.

In the Dutch colonial era, Indonesia was the world's largest sugar producer. Now the country is the second largest sugar importer after Russia.

The fall in output is due to a continuous decline in sugar production since 1993, while the country's consumption rate has been steadily climbing. Indonesian sugar production stood at 1.8 million tons in 2002, while domestic demand reached 3.2 million tons.

To protect sugarcane farmers in Indonesia, Rini issued a ministerial decree in September last year to curb sugar imports and to help farmers.

Under the decree, only manufacturing companies that take 75 percent of their raw materials from local farmers are allowed to import raw, refined and white sugar. The firms which received licenses to import sugar include state plantations PT Perkebunan Nusantara IX, X, XI and RNI.

However, in September this year, the government also gave a license to PT Perdagangan Indonesia (PPI), a purely trading firm, to import sugar for outside Java. PPI is the product of a merger between PT Pantja Niaga and PT Dharma Niaga, which in the past monopolized the importation of alcoholic beverages.