Government to impose new sugar tariffs this week

Government to impose new sugar tariffs this week

Dow Jones, Jakarta

The government will likely impose new import tariffs on sugar this week, in a bid to help local sugar cane farmers, Minister of Finance Boediono told Dow Jones Newswires Monday.

Boediono didn't give details of the new tariff rates however, saying they haven't yet been finalized.

A source working close to the team that sets the tariffs said duties have been set at Rp 550-950 a kilogram.

Indonesia's current import duty for raw sugar is 20 percent, and 25 percent for white sugar. Based on recent purchases, this translates to about Rp 405/kg for raw sugar and around Rp 534/kg for white.

The source said the new tariff rate is based on a production cost of Rp 3,200/kg, an exchange rate of Rp 8,750 against the dollar and current international sugar prices.

As domestic sugar production lags consumption, Indonesia has to import sugar to meet requirements. Around 1.5 million to 1.6 million tons of sugar is required annually to meet domestic demand from households and food and beverage industries, according to a report released by the U.S. Department of Agriculture in April.

In 2002/03, Indonesia 's consumption is forecast at 3.5 million tons, almost 3 percent higher than in the previous year, the USDA said in the report.