Government sets 25% duty on sugar, 30% on rice
Government sets 25% duty on sugar, 30% on rice
JAKARTA (JP): Minister of Industry and Trade Yusuf Kalla said
on Tuesday that the government and the International Monetary
Fund (IMF) had agreed to reimpose an import duty on sugar and
rice to protect local farmers from cheap imports.
"We have decided on a 25 percent (import duty) for sugar, and
about 30 percent for rice," he said following a meeting with
senior economic ministers on the country's next 2000 state
budget.
He said that the new duty would be contained in the next
government letter of intent (LoI) to the IMF, which would be
published some time this week.
Kalla did not provide further details.
Late last month, Minister of Agriculture Muhammad Prakosa said
the government would review rice import tariffs once every six
months.
He said a tariff team at the finance ministry would regularly
review rice duties based on rice production and prices both in
the domestic and international markets.
The IMF earlier opposed plans to reimpose duty on the two
commodities. The duty was earlier cut to zero percent following
pressure from the fund, which has been championing a free and
open market.
The IMF is providing a multibillion dollar bailout to finance
the country's economic programs.
But the government insisted that a zero percent duty would
kill local farmers as the price of imported rice had declined
sharply due to the strengthening of the rupiah to the U.S.
dollar. The availability of cheap imported rice has severely hurt
prospects for local farmers.
The government initially proposed a higher duty for both sugar
and rice, but it was rejected by the IMF.
Several agriculture experts criticized the move to reimpose
the duty on rice as it would not solve the basic problem, which
is the lack of competitiveness of the local farm production
system and the distribution system.
The country imported 4.8 million tons of rice in the 1998/1999
fiscal year ending March 31, because of a series of harvest
failures largely attributed to bad weather.
The country's annual rice demand is estimated to be 32 million
tons, including 27 million tons for consumption, three million
for industrial use and two million as a reserve for the State
Logistics Agency (Bulog).
Meanwhile, Bulog said in a statement on Tuesday that it
planned to hold a tender this month to import rice to replenish
its rice stock.
The agency also said that financing for the import of rice
would use the "remaining funds" from the Islamic Development Bank
to import some 100 tons from Pakistan, Thailand, Vietnam and
China with a shipment schedule for March.
Bulog said that it had to resort to foreign loans because the
central bank no longer provided lending facilities.
The agency also said the rice import would not hurt local
farmers because the government had reimposed the 30 percent duty.
Separately, East Java Governor Imam U. Suparno was quoted by
the evening Suara Pembaruan daily as saying that he would propose
the government to impose a 65 percent import duty for sugar.
He said that a 25 percent duty would not protect local farmers
from cheap imports.
Price of imported sugar is currently at Rp 2,200 per kg, while
local sugar is sold at Rp 2,500 per kg.
East Java is the country's major source of sugar. (rei)