Rini's move to supervise clove imports criticized

Adianto P. Simamora, The Jakarta Post, Jakarta

The latest move by Minister of Industry and Trade Rini M. Soewandi to supervise the import of cloves will not be effective in protecting the interests of local farmers, who have seen the price of the commodity here fall to record lows, experts said.

Soy Pardede, director of trade at the Chamber of Commerce and Industry (Kadin), said the government should instead introduce a high import duty on the commodity.

"Imposing a high import duty is the right solution if the government wants to seriously help local farmers," Soy told The Jakarta Post on Tuesday.

The government currently applies a three percent import duty on cloves.

Ine Minara S. Ruky, an economist at the University of Indonesia, shared Soy's opinion, saying that raising the import duty was not against the ruling of the World Trade Organization (WTO).

"I don't believe that it (the new decree) will be able to prop up the price and promote farmers' interests,"

"This (decree) is a setback because many countries are now imposing high import duties on their products," Ine told The Post.

Ine said that one serious problem with the new import arrangement was the weak supervising capability of government officials and institutions.

Following complaints from local clove farmers of falling prices of the commodity, Rini launched a temporary measure, which only gives certain importers the authority to import cloves. She also set up a special team to supervise this new arrangement and also to study why the domestic price of cloves has been declining.

Under the decree, issued on July 5, all producer importers (mostly cigarette companies) must now report to the Ministry of Industry and Trade before importing cloves.

Director general for foreign trade at the ministry Sudar SA said importers must submit a proposal to his office which includes the total amount and time schedule of the imports.

"We will continue supervising clove imports until the price returns to normal. We really want to help farmers," Sudar told The Post.

Several legislators of the House of Representatives Commission V on industry and trade affairs had earlier urged the minister to temporarily ban the import of cloves in a bid to prop up the price.

The price of cloves is now only between Rp 19,000 (US$2) and Rp 20,000 per kilogram, compared to a price of between Rp 80,000 and Rp 90,000 at the end of last year.

Local farmers said the falling price was mainly due to the massive import of cloves from India and Zanzibar. They also believe cloves are being illegally imported.

Indonesia produces 30,000 tons of cloves a year, with domestic consumption amounting to 70,000 tons.

Some 95 percent of the total clove output was absorbed by local cigarette producers.

According to Rini, the ideal clove price should be between $4 and $4.5 per kilogram.