New sugar policy not so sweet for producers

New sugar policy not so sweet for producers

JAKARTA (JP): The government's move to impose new restrictions
on sugar imports will not bring much help to local sugar
producers, according to the association of Indonesian sugar
producers.

Indonesian Sugar Association chairman Farukh Bakrie said
allowing sugar producers to import the commodity would not help
local sugar compete with the less expensive imported sugar.

"What the industry needs is for the government to reimpose
import duties in order to protect the sugar industry and
farmers," Farukh was quoted by Antara news agency as saying.

He said imposing import duties on sugar was easier and more
effective than the new restrictions in reducing sugar imports.

"By imposing a high import tariff on sugar the government
would gain additional revenue, while the government could save
the money it uses subsidizing sugar factories," Farukh said.

Under the new sugar policy enacted by the Ministry of Industry
and Trade late last week, certain types of sugar will only be
allowed to be imported by Java-based sugar producers which hold
import and production permits. The amount of sugar the mills will
be able to import will be decided by the ministry.

The new policy, which will remain valid until December this
year, regulates eight categories of sugar which are allowed to
enter the country, including cane sugar, beet sugar, packaged
sugar and double refined sugar.

The new policy states sugar importers/producers must submit a
written report on their sugar imports to the Directorate General
for Foreign Trade, which issues sugar import licenses.

According to the ministry, the new import restrictions are
intended to protect the domestic sugar industry and sugarcane
farmers from a further fall in sugar prices.

The government removed import duties on sugar late last year
in compliance with economic reform programs agreed upon with the
International Monetary Fund (IMF), which is organizing a US$40
billion bailout for Indonesia.

Indonesia, which produces about 1.7 million tons of sugar a
year, has to import the commodity to meet local demand, which
reaches about 3.1 million tons.

The liberalization of sugar imports has severely damaged local
sugar producers, particularly after the rupiah strengthened
against the U.S. dollar over the past few months. This has made
local sugar more expensive than imported sugar.

Meanwhile, Minister of Industry and Trade Rahardi Ramelan
defended the new sugar import restrictions, reiterating that the
new policy was aimed at helping the local sugar industry and
sugarcane farmers.

Rahardi said under the new policy, sugar producers/importers
would be obliged to buy a particular amount of sugar from local
farmers. However, he did not specify the amounts.

The minister also said the new sugar policy did not violate
the economic programs agreed upon with the IMF.

"We have the right to issue regulations to cure our ailing
sugar industry. This is an emergency case," Rahardi said, adding
that the new policy would end before the IMF letter of intent
came into effect in 2000.

Director General for Foreign Trade Djoko Moeljono said
reimposing import duties on sugar would be complicated because
the government would first have to notify the World Trade Order
and Association of Southeast Asian Nations ministers.(01)