Government divided over countertrade deals

Adianto P. Simamora, The Jakarta Post, Jakarta

The Ministry of Agriculture protested the plan by Minister of Industry and Trade Rini M. Soewandi to import more rice as part of her initiative to push countertrade deals with other nations.

Iskandar Nuhung, director general for the processing and marketing of agriculture products at the Ministry of Agriculture, said the entry of more imported rice into the country would cause suffering to the millions of local rice farmers.

"We don't have a problem with the countertrade program, but we don't agree if the Indonesian products are exchanged with rice from other nations," he told The Jakarta Post over the weekend.

The rice imported via the countertrade program would be sold much cheaper at home as it would be exempted from the 30 percent import tariff, analysts have said. This will likely create a downward pressure on the price of local rice.

Iskandar said that his office had already sent a letter to the Office of the Coordinating Minister of the Economy to protest the rice import plan.

"We have also expressed objection to the Ministry of Industry and Trade via Sudar SA (director general of international trade affairs), but there has been no response yet," Iskandar said.

Rini recently signed memorandums of understanding (MoUs) with several nations to boost countertrade deals with other nations including with Thailand, Cambodia, Vietnam, India, and China.

The move is aimed at helping improve the country's dwindling exports amid the current global economic slowdown.

Under the MoUs with Thailand and Cambodia, Indonesia would import 200,000 tons and 100,000 tons respectively, in exchange for the export of various products such as aircraft, train cars, fertilizers and agriculture equipment. The deal with Thailand is valued at around US$40 million.

Analysts have said that Rini should have talked with other ministers concerned, including with the minister of agriculture, in pursuing the countertrade deals so as not to cause damage at home. They said that the import of more rice, for instance, would put pressure on the price of rice here.

Iskandar said that rice imports must be strictly limited because the economy of some 20 million families or equivalent to the lives of 100 million Indonesian people were still dependent on rice farming.

"We need to help local farmers by boosting the price of this commodity at the local market," he said.

He said that Rini's countertrade program should not undermine the interest of the nation.

There has been growing pressure on the government to raise the import tariff on rice to help limit the influx of cheaper imported rice.

The State Logistics Agency (Bulog) is planning to import at least 1 million tons of rice this year as part of its rice reserves strategy.