RI to lobby China on cacao duties

Zakki P. Hakim and Rendi A. Witular, The Jakarta Post/Jakarta

The Ministry of Agriculture has urged the trade ministry to lobby China to slash import duties on Indonesian cacao beans and products to the same level that Malaysia is currently enjoying.

Agriculture minister Anton Apriyantono said he had asked trade minister Mari E. Pangestu to negotiate the tariff cuts.

"Apparently, the tariff difference is a result of negotiations carried out by the former administration. Thus, we have to renegotiate," Anton told The Jakarta Post on Friday.

He added the trade minister had agreed to renegotiate and would lead the move. However, Mari was not available for comment.

Local industries have complained that they do not enjoy the same advantages as Malaysia because of the tariff rate disparities.

The Association of Indonesian Cacao Industry (AIKI) chairman Piter Jasman said tariffs for Malaysian cacao products will be slashed gradually to zero by early next year, while Indonesia's cacao still has to pay duties of around 10 percent until at least 2007.

Piter said China was a very important market, last year taking 50,000 tons of cocoa products, such as cocoa powder and butter. "And the demand has an annual growth of 20 percent."

Indonesia exported 94,058 tons of cocoa products last year, slightly up from 2003's 92,770 tons.

The Association of Indonesian Cacao Exporters (Askindo) had a similar complaint on the tariff disparities against Malaysia.

Indonesia's neighbor has relatively limited production and export of cocoa beans, thus it imports the commodity from Indonesia and later profits by exporting processed cocoa products.

Indonesia's total cacao beans exports last year reached 277,060 tons worth $370.24 million, with Malaysia absorbing almost half the total exports, making it Indonesia's top export market for the commodity.

Malaysia's cocoa beans and products enjoy the zero tariff under the Early Harvest Program (EHP) -- a tariff cut package as a prelude to the implementation of a Free Trade Agreement (FTA) between China and the Association of Southeast Asian Nations (ASEAN).

Under the EHP, China and ASEAN countries must start slashing tariffs on farm goods to 10 percent or lower starting Jan. 1, 2004 and zero percent by Jan. 1, 2006.

According to data from the trade ministry, Indonesia only included one group of cocoa products, namely "cocoa powder, containing added sugar or other sweeteners". While Malaysia included on the list cocoa beans and five other cocoa products.

Trade ministry officials, however, said all negotiations in the international forum were always based on inputs and requests from stakeholders, in this case related associations.

"If the related sector didn't propose the products to be included in the EHP, consequently we would not include them," the ministry's inter- and intra-regional cooperation deputy director Retno Kusumo Astuti said.