Indonesia and Philippines agree to buy Thailand sugar
Indonesia and Philippines agree to buy Thailand sugar
Rebecca Thurlow, Dow Jones, Bandar Seri Begawan
Thailand's Deputy Minister of Finance Suchart Jaovisidha said Wednesday Indonesia and the Philippines have agreed to enter into long-term contracts to buy Thai sugar, relieving the need for Thailand to push for tariff reductions for Thai sugar imported by the two countries.
Thailand has been concerned about plans by Indonesia and the Philippines to delay cutting tariffs on sugar imports from the Association of South East Asian Nations countries under the Asean Free Trade Agreement.
Thailand Commerce Minister Adisai Bodharamik said Monday that Thailand would ask the two countries to reduce their tariffs on sugar from Thailand to below the level of tariffs on imports from nations outside of Asean during the Asean Free Trade Area Council meeting Wednesday.
However, Suchart told Dow Jones Newswires in an interview soon after the meeting that there is no need for the tariff reductions as the two countries agreed Wednesday to enter into long-term contracts.
"Indonesia has agreed to enter into a long-term contract," he said.
"As long as Indonesia are buying sugar from Thailand, that would be satisfactory to me."
The Philippines had also agreed to enter into a long-term contract, relieving the need for their tariffs to be reduced, he said.
The details haven't been decided but he said the term of the contracts would likely be five to 10 years, he said.
Thailand is sensitive to the fact that the two countries would face revenue implications if they cut the tariffs, he said.
"They need the income from tax. We understand their problem," he said.
Thailand is Asia's largest sugar exporter and was concerned it would lose export opportunities to the Philippines and Indonesia if any reduction in sugar import tariffs is delayed.
In response to requests from the Philippines and Indonesia, the Asean Free Trade Agreement Council in September 2001 allowed the Philippines to delay lowering import tariffs on sugar to 0 percent-5 percent in 2010 from the original schedule of 2003.
Indonesia was also allowed to delay cutting sugar import tariffs and the final rate, which hasn't yet been decided, will be allowed to exceed 5 percent.
Indonesia imposes a tariff on sugar of 27 percent-32 percent while the Philippines sets the sugar import tariff at 50 percent- 55 percent
Thai government officials said early in the week that a lower import tariff on sugar from Asean countries would maintain the competitiveness of Thai sugar exports to these two countries.
Indonesia is Asia's largest sugar importer, importing around 1 million-1.5 million metric tons of sugar annually. The Philippines' sugar needs are mostly fulfilled by local production. The Philippines has imported around 107,000 tons of sugar so far this year.