Govt raises import duty on sugar

The Jakarta Post, Jakarta

The government has increased the import duty on raw sugar and white sugar to help protect local sugarcane farmers from cheaper imports.

According to a finance ministry decree signed on July 3, the new import duty for raw sugar and sugarcane is now set at Rp 550 per kilogram.

The decree raised the import duty on white sugar and double refined sugar to Rp 700 per kg.

The duty for raw sugar and white sugar were previously set at 20 percent and 25 percent, respectively, which in rupiah terms was equal to Rp 405 per kg for raw sugar and Rp 534 per kg for white sugar.

The decree said that the new import duty would be effective for two years from July 3.

Sugarcane farmers had been demanding the government raise the import duty on sugar products amid massive inflows of cheaper imported products.

Minister of Agriculture Bungaran Saragih supported the demands, but Minister of Trade and Industry Rini MS Soewandi opposed it on grounds that the higher tariff would make sugar prices at home higher, which in turn would create burden to end users: food and beverage processors and households.

Farmers groups had initially demanded a much higher import duty.

But the finance ministry decree said that the higher duty was also meant not to create too much of a burden on sugar consumers.

Indonesia is among of the world's top sugar importers, importing around 2.1 million tons of sugar in 1999 and 1.2 million tons in 2000, mainly from Thailand.

The country also has the lowest import duty on the commodity. The European countries impose a 240 percent import duty on the commodity, and the United States 150 percent. Neighboring countries, Thailand and the Philippines, impose an import duty of 95 percent to 100 percent.

The government is also planning measures to boost local sugar output.

Bungaran had earlier said that his office would initiate measures to boost the productivity of local sugarcane farmers so that output this year could increase to 1.9 million tons, compared with 1.7 million tons last year.

It is projected that sugar output in 2007 could jump to 3 million tons, equal to the current domestic consumption level.

Part of the productivity-boosting plan, Bungaran said, was to introduce high-quality seeds to local farmers.

The agriculture ministry is also planning to rehabilitate some 70,000 hectares of sugarcane plantation every year and replant with premier sugarcane seeds so they could produce a higher yield.