House urges govt to ban sugar import

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.