RI to rely more on sugar imports, U.S. report says

RI to rely more on sugar imports, U.S. report says

WASHINGTON (Reuter): Indonesian sugar production is declining
while consumption is constantly increasing due to inefficiency of
old sugar mills and low sugar yields, the Agriculture Department
reported here on Tuesday.

The report, based on the assessment made by the agricultural
attache at the U.S. embassy in Jakarta, said lack of supply had
resulted in increasing import of raw and refined sugar.

During the 1996/97 marketing year Indonesia's raw sugar
imports totaled an estimated 425,000 tons while refined imports
(raw basis) totaled 775,000 tons..

Imports for 1997/98 are forecast at 450,000 tons of raw sugar
and 800,000 tons of refined (raw basis). Thailand, India and
Australia are the main suppliers.

As part of the most recent deregulation policy of the
Indonesian government which was announced July 7, 1997, and
effective immediately, the importation of raw sugar cane: HS.
1701.11.000 and raw sugar beet: HS 1701.12.000 was deregulated.

Previously, import of any and all sugar had to be conducted by
the National Logistics Agency (Bulog). Under the July 1997
deregulation package, producer importers or companies/plants
which use imports in their production processes) can import raw
sugar with zero percent duty plus a value added tax of 10
percent.

Imports of other sugar categories remain under Bulog
management. In addition to the sugar import authorization, the
government eliminated the import duty of refined white sugar for
industry (double refined sugar - HS. 1701.99.191) which was 10
percent. However, the 10 percent value added tax remains.

Bulog manages the imports of this commodity. This deregulation
is part of the continuing effort to expand sugar refining and
move the refining from the small and inefficient facilities on
Java to more modern facilities on Java or to other islands.

The deregulation of importation of raw sugar is aimed at
lowering the price of industrial sugar in the local market. This
policy is taken due to increasing demand from the vast growing
local food and beverage industry which has a total demand
estimated at 300,000 to 400,000 tons per year.

Bulog remains the sole importer and distributor of refined
white sugar (HS. 1701.99.110) for household consumption and other
sugar categories, i.e., raw sugar containing added flavoring or
coloring (HS. 1701.91.000); other than double refined sugar (HS.
1701.99.199); and other than refined white sugar (HS.
1701.99.900).

Although there is no written statement on this issue,
unconfirmed reports indicate that the distribution of refined
sugar will also be deregulated soon, i.e., will be allowed by the
private sector.

Under the deregulation package raw sugar is defined as a
regulated imported good (Decree No. 230/MPP/Kep/7/97 dated July
4, 1997) and the companies which want producer importer status
must register/qualify with the Director General for International
Trade, Ministry of Industry and Trade. The Director General for
International Trade determines the quantity and the kind of goods
(non-waste materials) which can be imported annually by producer
importer.

Companies which received the producer importer status prior to
the new decree are not required to reapply the producer importer
status as long as the owner of the producer importer company is
still active.

The producer importer status is no longer valid for companies
whose imports have been deregulated. The companies seeking
producer importer status must also hold a valid import license.
Currently, there is only one private sugar refinery in operation,
PT. Bermis Madu Sejati in Serang (West Java), that was just
inaugurated in June 1997.

The first stage production capacity of this new sugar refinery
is 150,000 tons per annum which will increase to the planned
production capacity of 200,000 tons per annum. Bulog reportedly
has share in this new refinery. Another private sugar refinery,
PT. Dwipangga Gula Prima, will be built in Cilacap, Central Java.
Bambang Trihatmodjo, the President's son, has a share in this
facility.