House to review govt sugar import policy

Adianto P. Simamora, The Jakarta Post, Jakarta

The House of Representatives has set up a special team to review a new government trade ruling on sugar which effectively limits the import of the commodity, a senior legislator said on Friday.

"The team is now examining the impact of the ruling. This is a setback policy amid the free market era," Irmadi Lubis of the House of Representatives Commission V, which oversees industry and trade affairs, told The Jakarta Post.

He said that the ruling, which was aimed at protecting local sugarcane farmers against cheaper imported sugar, had caused an increase in domestic sugar prices.

Minister of Industry and Trade Rini M. Soewandi has recently issued a ruling which allows only state-owned plantation firms to import sugar, in a bid to protect local sugarcane farmers who have suffered lower income from a continuing decline in the price of sugar.

Irmadi, however, accused Rini of not making a proper assessment before issuing the new ruling, as indicated by the fact that the ruling had caused domestic sugar prices to surge to Rp 5,000 per kilogram, much higher than the Rp 3,100 per kilogram price under the government plan.

He further said that giving exclusive rights to state-owned plantation firms to import sugar was not an effective measure, as the companies lack cash, experience and expertise in importing sugar.

"This is not a solution -- the three companies do not have enough money to import sugar, and they also lack the experience and networking to distribute sugar," he said.

Indeed, the government later asked the State Logistics Agency (Bulog) to help the plantation firms to import and distribute sugar, after the firms failed to perform as expected.

Indonesia is among the world's top sugar importers, importing 2.1 million tons in 1999, 1.2 million tons in 2000 and 1.6 million tons in 2001.

The country produces a total of 1.7 million tons of sugar, with an annual consumption rate of 3.3 million tons.

Irmadi said that the House special team had talked with various quarters, including farmers, consumer groups, plantation firms and associations, to sort out the problem.

"We will also summon Rini to explain the reasons behind the policy. We will ask the ministry to drop the policy," Irmadi said.

"It (the new policy) does not touch the real problems...the ministry did not conduct a comprehensive study before issuing the policy," Irmadi said.