RI turns down proposal for lower import tariff on sugar

RI turns down proposal for lower import tariff on sugar

Adianto P. Simamora, The Jakarta Post, Jakarta

The government will maintain the current high import tariff on
sugar to protect local farmers despite a proposal from Thailand
for a lower tariff, according to a senior official at the
Ministry of Trade and Industry.

"We will keep the import tariff on sugar at between 20 and 25
percent," Budi Darmadi, director of regional cooperation at the
ministry told The Jakarta Post.

Thailand's Commerce Minister Adisai Bodharamik earlier sent a
letter to his counterparts in Indonesia and the Philippines
proposing a lower import tariff on sugar from ASEAN (Association
of South East Asian Nations) countries than on sugar from non-
ASEAN countries.

Indonesia, the region's largest sugar importer, currently
applies a 20 percent import tariff on white sugar and a 25
percent tariff on raw sugar.

"That (import tariff) is a compromise level between the local
producers (farmers) and consumers (industries)," Budi said.

Indonesia, the Philippines and Thailand are among the six
original members of the 10-nation ASEAN grouping that have
implemented the ASEAN Free Trade Area (AFTA). The other three
founding members are Singapore, Malaysia and Brunei Darussalam.

Under AFTA, which came into effect on Jan.1, 2002, import
tariffs on almost all goods traded among the six founding members
have been cut to between zero and five percent.

The original AFTA agreement stipulated that both Indonesia and
the Philippines should have reduced their import tariffs on sugar
by 2002.

But local farmers and the House of Representatives have
opposed the plan and called on the government to maintain the
high import tariffs to protect farmers here from imported sugar.

"We have fought very hard to transfer sugar products from the
inclusion list to the highly sensitive list, and we will keep
fighting for the (high) tariff," Budi said.

During a ministerial meeting in Nov. 2001 in Hanoi, the AFTA
Council granted both the Philippines and Indonesia permission to
maintain their high import tariffs on sugar for several years
before gradually reducing them to a maximum of five percent in
2010.

The AFTA Council permitted Indonesia to include sugar on its
highly sensitive list, meaning it will start lowering the tariff
in 2005, with the final rate not allowed to exceed 5 percent.

Indonesia produces approximately 1.5 million tons of sugar
annually, while domestic consumption stands at around 3 million
tons a year.

Indonesia imported around 2.1 million tons of sugar in 1999
and 1.2 million tons in 2000.

Around 761,000 tons of the sugar imported in 2001 came from
Thailand.

Thailand is Asia's largest sugar producer.

Budi said that the sugar tariff issue would be further
discussed at the upcoming ASEAN Senior Economic Officials Meeting
(SEOM) next month.

Budi said that the SEOM meting would take place in the royal
city of Yogyakarta from March 22 - 24.