Govt plans increase sugar import tariff to 65 percent

Adianto P.Simamora, The Jakarta Post, Jakarta

The Ministry of Agriculture has proposed an increase in sugar import tariffs to around 65 percent in a bid to protect local farmers, according to a senior official.

Director general of plantations Agus Pakpahan said on Monday that the proposal had been submitted to the government's special tariff team.

"The tariff team is still discussing our proposal," Agus told reporters.

The team consists of officials from the Ministry of Industry and Trade and the Ministry of Finance.

The government currently applies a 20 percent import tariff on raw sugar and a 25 percent tariff on white sugar.

"Based on our calculations the 65 percent rate is a minimal import tariff that will allow them (local sugar industries) to survive against imported products," Agus said.

Indonesia, Southeast Asia's largest sugar importer, imported about 2.1 million tons of sugar in 1999 and some 1.2 million tons in 2000 to meet domestic demand of about 3 million tons each year.

India and Thailand, meanwhile, are Asia's main sugar suppliers.

According to Agus, some sugar producing countries have imposed high import tariffs to protect their own sugar industries, pointing to the 240 percent tariff imposed by European Union countries, as well as Bangladesh's 200 percent, the U.S.'s 155 percent, India's 150 percent, the Philippines' 133 percent and Thailand's 104 percent tariffs.

Local producers have been demanding that the government increase import tariffs on sugar.

Muhamad Arun Sabil, chairman of the Sugar Cane Farmers' Association (APTR), said that the influx of imported sugar onto the Indonesian market had hurt local industries and discouraged local farmers from cultivating sugar cane.

He said that several "naughty" importers had misused their import licenses to take advantage of Indonesia's low tariffs.

Arun said that the association and farmers had asked the government to impose a 110 percent import tariff on sugar to protect local industry and the farmers.

"We are now here (at this seminar) to make a resolution to ask the government to immediately take actions to penalize 'naughty' importers," Arun said during the seminar.

Elsewhere, Agus said that domestic sugar output was expected to rise to 1.9 million tons this year, up from 1.7 million tons last year.

Agus also voiced optimism that domestic output would reach 3 million tons in 2007.

"We will continue efforts to boost local sugar production to 3 million tons by 2007," he said.