House urges govt to ban sugar import

Eva C. Komandjaja, The Jakarta Post, Jakarta

The House of Representatives urged the government to put a temporary ban on all sugar imports until February 2004 to stabilize the price of the commodity domestically.

The call was made by the House's Commission V for industry, trade and cooperatives in their concluding remarks after a hearing with state-owned plantation companies PT Perkebunan Nusantara IX, X and XI and PT Rajawali Nusantara Indonesia (RNI). The firms' has also demanded the ban.

The four firms are among those which are authorized by the government to import sugar.

Quoting the government's data, the Commission said there were approximately 630,000 tons of sugar now being stored in the country, and, if accurate, there would not be a deficit in supply for the next three months.

With the temporary ban, the Commission believed that sugar prices, passed on to consumers here could "stabilize" at between Rp 3,410 (40 U.S. cents) and Rp 4,500 per kilogram.

Sugar trade has been a controversial issue in the country for years as most sugarcane farmers, particularly in Java, live a hardscrabble existence because they cannot compete with the lower prices of sugar imports. According to the farmers, sugar imported from such countries as Thailand, Vietnam, Malaysia, Thailand and India would sell at a lower price here, because they claim most of them are illegally imported.

In a move to help the farmers, Minister of Industry and Trade Rini MS Soewandi issued a ministerial decree in September last year to curb the imports. Under the decree, only manufacturing companies which take 75 percent of their raw materials from local farmers, are allowed to import raw, refined and white sugar.

However, analysts say the decree is still a far cry from being effective.

Illegally imported sugar has reportedly continued flooding the market, while the government has also given an import license to PT Perusahaan Perdagangan Indonesia (PPI), a pure trading firm -- seemingly in direct conflict with the ministerial decree which allows only sugar manufacturers to import sugar. PPI is the merger of PT Pantja Niaga and PT Dharma Niaga, which in the past monopolized the importation of alcoholic drinks.

According to government procedures, if smuggled sugar is found, the government will auction off the sugar to sugar producers.

However, a member of Commission V, Mindo Sianipar said that the auction process itself was subject to corruption and collusion.

"We fear that there are smugglers among the bidders for the sugar auctions, so if they win the bid, they can claim that their goods are legal because they have the auction certificates," said Mindo.

Elsewhere in the concluding remarks, the Commission said it would investigate the illegal sugar auction to determine whether the auction was carried out properly.

The Commission also encouraged state-owned plantations and RNI to distribute sugar, either imported or local, through small and medium enterprises (SMEs) such as cooperatives instead of larger distributors or the State Logistics Agency (Bulog) to promote their growth, especially in remote areas.