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Sat, 05 Jan 2002

JP/Govt under fire for plan on wheat duties

Govt under fire for plan on wheat duties

The Jakarta Post, Jakarta

The Indonesian monopoly watchdog has slammed the government's plan to impose antidumping duties on wheat as the move would benefit only one single company, PT Bogasari Flour Mills, at the cost of millions of consumers.

The Business Competition Supervisory Commission (KPPU) argues that imposing additional duties for wheat would also affect future competition in the wheat grinding industry, and thus would only support Bogasari's market domination.

"The policy will only benefit this big wheat flour producer", KPPU chairman Mohammad Iqbal said, at a media conference on Friday.

Earlier, the Indonesian Antidumping Committee under the Ministry of Industry and Trade proposed countervailing duties on wheat based on a report filed by Bogasari, a unit of publicly- listed food producer PT Indofood Sukses Makmur.

Bogasari has been losing out in business to a number of local wheat flour producers, following the opening of the domestic wheat market in 1998.

Before the opening, Bogasari controlled almost 90 percent of the domestic wheat flour market. Its market share dropped to 68 percent in 2000.

Iqbal noted that fairer competition had made Bogasari lose out, while other domestic wheat flour producers like Sriboga, Pangan Mas and Berdikari gained a greater foothold.

He also noted that Bogasari had lost out in business due to competition and unnecessary production expansion at a time of low utilized capacity. It had nothing to do with the alleged dumping practices.

Besides, Bogasari, with its extensive distribution networks, booked a relatively high operating profit of 23.9 percent, whereas similar producers in other countries only booked 15 percent.

Therefore, slapping more duties on wheat imports would not do any good to competition. In addition, it would punish consumers with more expensive wheat flour.

Bogasari, Iqbal said, should not cry for help as it had a captive market of 47.25 percent of domestic market shares by supplying wheat flour to its parent company, Indofood.