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)