Rini unwilling to ban rice imports

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini MS Soewandi is reluctant to impose a ban on rice imports as such a move would violate World Trade Organization (WTO) laws, and create a heavier burden on consumers at home in the form of higher prices.

"I have to be very careful about it (halting rice imports)," Rini told reporters on Monday.

Last week, the president of state-owned logistics company Bulog, Widjanarko Puspoyo, demanded the minister ban rice imports in a bid to avoid oversupply at home during the current harvest season and protect the interests of local farmers who were unable to compete with cheaper imported products. The ban must last at least until September.

Rini said the request would be difficult to implement as it would breach WTO laws, which allows member countries to impose import tariffs but forbid them from imposing trade barriers.

She said a complete ban on rice imports would send the price of the commodity higher at home thus creating a burden on local consumers. Rice is the main staple of the country's more than 220 million people.

She said that based on the experience of her latest policy of regulating the sugar trade at home (which has recently contributed to the surge in sugar prices here), the government should avoid regulating the trade of strategic commodities.

Under Rini's sugar policy, only a select number of companies are allowed to import sugar in a bid to help avoid oversupply.

Rini said her office was now studying other mechanisms to protect local rice farmers during the current harvest season, but mechanisms that did not breach WTO laws.

"I still have to discuss this with other related ministers," she said, declining to provide details.

Previously, the Ministry of Agriculture and also the Indonesian Farmers Association (HKTI) said the government should raise tariffs on rice to help limit the entry of cheap imports.

But Bulog argued that raising tariffs would not be effective amid the current condition.

Widjanarko said that Bulog's warehouse facility had a limited capacity to absorb farmers' output.

The price of unhusked rice at farm level has dropped to around Rp 800 per kg compared to the government's target of Rp 1,500 per kg. Many blame this on the inflow of cheap rice products from overseas.

The country's unhusked rice output this year is expected to reach some 52 million tons (or equal to about 32 million tons of rice).