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.