Government vows to curb smuggling of cheap sugar
Dadan Wijaksana, The Jakarta Post, Jakarta
The Customs and Excise Office and the Ministry of Industry and Trade are currently designing a detailed burden-sharing mechanism to supervise inter-island trade in sugar and other commodities within the country in a bid to curb rampant smuggling.
Director General of Customs and Excise Eddy Abdurrachman said the scheme would form the operational guidelines for a decree issued by the Ministry of Industry and Trade that regulates the shipment of agricultural commodities within the country.
The decree in question is No. 61/2004, and was signed by Rini two months ago, but will not be effective until after April 17.
"The shipment (of commodities) within the country is not forbidden. But as sugar is among those commodities that have their own regulations, including on importation, its shipment must be watched closely. The detailed scheme is currently being discussed," Eddy said on Wednesday.
The ministry issued last September a ruling limiting the importation of sugar. Only manufacturing firms that take 75 percent of their sugar as raw material from local farmers are allowed to import raw, refined and white sugar. The move is expected to help increase the price of sugar in the local market and improve farmers' incomes.
The firms that are allowed to import sugar include state plantations PT Perkebunan Nusantara IX, X, XI and RNI. They are tasked to fill the huge gap between domestic supply and consumption.
In 2002, for instance, Indonesia produced only 1.8 million tons of sugar, while demand reached 3.2 million tons.
Still, the move has failed to stop the smuggling of cheaper sugar from overseas into the country, which has flooded the local market and hurt sugarcane farmers.
Indonesian Association of Sugarcane Growers (APTRI) chairman Arum Sabil said earlier that smuggled sugar hurt domestic sugar growers. "The smuggled sugar badly hurts our sugarcane growers, for it is sold for as little as Rp 1,200 per kilogram because no import duties and taxes are paid on the commodity," he said.
He added that most of the illegal sugar came from Malaysia, India and Thailand, where sugar production cost could be as low as half the production cost to Indonesian sugar makers due to subsidies provided by the governments of those countries.
In contrast, it costs sugar producers here at least Rp 3,410 to produce a kilogram of sugar.
The latest example of rampant sugar smuggling here occurred a few days ago, when the customs office at Tanjung Priok port detected and held 197 containers with an estimated weight of 3,758 tons. The sugar was being smuggled from Malaysia to Jakarta via Medan.
Rini has reportedly suggested the illegal sugar be destroyed so as not to put the price of local sugar under further pressure -- a move supported by Minister of Agricultural Bungaran Saragih.
When this was confirmed to Eddy, he said all would be resolved soon, as a consultation meeting between related institutions had been arranged.
The customs office is administratively a unit under the Ministry of Finance.