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.