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.