RI losing out in Chinese cocoa market: Askindo

RI losing out in Chinese cocoa market: Askindo

Zakki P. Hakim, The Jakarta Post, Jakarta

Indonesia is losing out to Malaysia in grabbing a slice of
China's cocoa bean market, as Asia's largest economy applies a
zero-tariff policy for the commodity originating from Malaysia,
an association has said.

The situation is different for Indonesia, which still has to
face the tariff barrier, the Association of Indonesian Cocoa
Exporters (Askindo) said on Thursday.

"We're certainly losing the Chinese market to Malaysia. We
can't compete with them head-on as Malaysian cocoa beans enjoy
zero tariff," Askindo chairman Zulhefi Sikumbang told The Jakarta
Post on Thursday.

Askindo blames the government for not pursuing the zero tariff
policy on the product. Zulhefi claimed that the association had
proposed that the government lobby its Chinese counterparts for
tariff cuts on the commodities.

Malaysia is enjoying zero tariff under the Early Harvest
Program (EHP) -- a tariff-cut package preluding the
implementation of a Free Trade Agreement between China and the
Association of Southeast Asian Nations (ASEAN).

Under the EHP, China and ASEAN countries should start to slash
tariffs on agricultural products to 10 percent or lower starting
Jan 1, 2004 and zero percent in Jan. 1, 2006.

According to data from the Ministry of Trade, Indonesia only
included one group of cocoa products, namely "cocoa powder,
containing added sugar or other sweeteners".

Meanwhile, Malaysia included on its list cocoa beans and five
other cocoa products.

Indonesia, on the other hand, has to pay import duty ranging
from 5 percent to 20 percent for its cocoa beans and cocoa
products until at least 2007.

In response, Ministry of Trade deputy director for inter- and
intra-regional cooperation Retno Kusumo Astuti said the
government's stance in all negotiations was always based on
inputs from the private sector.

"If the related sector didn't propose that the products be
included in the EHP, we would not include them," Retno told the
Post.

Indonesia's cocoa bean exports to China last year stood at
5,475 tons, dropping from 6,582 tons in 2003. The 2004 exports
were valued at US$7.90 million, as compared to $8.99 million in
the previous year.

In total, the country's cocoa bean exports reached 277,060
tons last year, valued at $370.24 million.

In a similar case, early last year, local oleochemical
industry was stunned to learn that China had applied a lower
import duty on Malaysia's palm oil derivative products as the
commodity was not included in the EHP.

Officials at the Ministry of Trade said that the commodity's
exclusion from the EHP was decided upon the request of the
industry itself.

The industry opted to protect the local market rather than
taking the chances of opening a potential export market to China.

The ministry quickly lobbied its Chinese counterparts to have
stearic acid included in the EHP. China eventually granted the
request and agreed to cut import duties on Indonesia's stearic
acid to the same level imposed on the Malaysian commodity as of
January this year.

Stearic acid is a palm oil derivative used to bind and thicken
lotions and creams, and is also useful for hardening soaps and
candles.