Government promises sugar import tariff in January

Government promises sugar import tariff in January

JAKARTA (JP): The government said on Tuesday that a tariff on
imported sugar would only be imposed after the post-fasting month
holiday of Idul Fitri in January.

Minister of Industry and Trade Yusuf Kalla said that while the
government agreed in principle to impose the tariff to protect
local farmers and producers, the interests of consumers must also
be considered in such a decision.

A joint team of the Ministry of Finance, the Ministry of
Industry and Trade and the Ministry of Forestry and Plantations
has been set up to look into the issue, he told a hearing with
the House of Representatives' Commission V on trade and industry.

"We're considering a suitable tariff that will support local
sugar farmers and producers." He said an announcement was
expected soon.

Sugar cane farmers have called for a 110 percent surcharge,
the highest permitted by the World Trade Organization (WTO), on
imports they said were undercutting their products.

Yusuf argued that a high surcharge would invite protests from
consumers.

Imported sugar currently sells for Rp 1,400 a kilogram
compared to Rp 2,400 for locally produced sugar. The local price
of imports has been declining, partly due to falling world prices
and because the stronger rupiah.

The government abolished the tariff on sugar in 1994 and
liberated imports of the commodity under an agreement with the
International Monetary Fund in 1998.

To protect local farmers, the government has asked sugar
producers to buy sugar from farmers at Rp 2,500 per kilogram. The
price difference is covered by the government's subsidy.

The government also restricted sugar imports beginning in
August to sugar producers and sugar-based food processors.

House Commission V meanwhile said it supported the industry's
demand for a 110 percent surcharge because the government's
protection policy was not effective in helping the farmers.

Commission chairman Bachtiar Chamsyah said he and his
colleagues studied the situation of sugar cane farmers in Java
and concluded the farmers would switch to rice farming unless
they received protection.

Their demand was reasonable, he said, adding that the
commission invited them to a hearing in Jakarta.

Yusuf also confirmed the government's decision to delay
opening trade ties with Israel because of mounting public
opposition.

The minister nevertheless echoed the government's position
that such a relationship would benefit Indonesia.

Israelis' high purchasing power made their country a potential
market for Indonesian products despite the small population, he
said.

"Basically, we wanted to diversify our export markets," he
told the commission. (03)