Govt blamed for sugar smuggling

Govt blamed for sugar smuggling

Abdul Khalik, Jakarta

The Ministry of Industry and Trade was to blame for the rampant
smuggling of sugar in the country during the past two years,
analysts said on Friday.

Civil Society Professionals chairman Ismed Hasan Putro said a
combination of a lack of capital, inadequate networks and
inexperience meant none of the five companies the ministry had
appointed to import the sugar were up to the task.

"The sugar importation licenses were granted directly to
several incapable companies... without any public tendering
process," Ismed told The Jakarta Post.

The firms -- state-owned plantation firms PTPN IX, PTPN X and
PTPN XI, PT Rajawali Nusantara Indonesia (RNI) and Perusahaan
Perdagangan Indonesia (PPI) -- were appointed in a ministerial
decree in 2002.

The decree, signed by Minister of Industry and Trade Rini MS
Suwandi, aimed to stabilize the price of local sugar. Previously,
many firms had been allowed to import sugar, causing prices to
fall.

Ismed said none of the plantation firms had any sugar trading
experience, nor did they have the networks and funds to
monopolize sugar importation.

The firms were forced to set up business deals with other
companies, including the Confederation of Primary Sugar
Cooperatives (Inkud) and its consortium, which they considered
experienced players in the business, he said.

"However, these companies eventually became brokers and
received fees as compensation for their sugar importation quota
(without facilitating imports)," said Ismed, who is also a sugar
businessman.

He accused the Inkud and its consortium of having inadequate
funds to import sugar.

The Inkud consortium later appointed PT Phoenix, Sucofindo and
Standard Chartered Bank as their partners and guarantors to help
ease the imports.

Bogor Institute of Agriculture academic H.S. Dillon criticized
as unfair the appointment of the five firms.

"I agree that only a few companies should be allowed to import
sugar. But the appointment should be through a transparent
bidding process. Only the best tenders should be given licenses,"
he told the Post.

He accused officials at the Ministry of Industry and Trade of
misusing the ministerial decree to enrich themselves or other
parties.

"These companies are used only as cash cows by certain
government officials at the ministry because they have no
capacity as importers," Dillon said.

Ismed said the government should annul the decree to allow
more firms to import sugar and avoid the widespread smuggling.

There has been a steady decline in sugar production since
1993, while the country's consumption rate has been climbing.
Indonesian sugar production stood at 1.8 million tons in 2002,
while domestic demand reached 3.2 million tons.

Ismed said Indonesia needed to relocate sugar plantations to
areas outside Java, where land was still fertile for sugar, to be
able to compete with the imported product.

"To increase both the quantity and quality of sugar and lower
the production cost, we should relocate sugar plantations," he
said.

Ismed and Dillon said they believed the current smuggling case
involving the ministry, Inkud, PTPN X and the customs and excise
office, was only the tip of the iceberg when it came to
smuggling.

They would not elaborate further.

Meanwhile, the National Police said on Friday they had
summoned Inkud chairman Nurdin Halid, who is a member of the
House of Representatives, for questioning on Monday in connection
with the recent smuggling of 72,000 tons of sugar.

"We will question him as a witness. We have prepared a list of
questions. If sufficient evidence is found during the
interrogation, we will declare him a suspect," chief of
detectives Comr. Gen. Suyitno Landung Sudjono said.