Sugar mills boycott imports from Australia
JAKARTA (JP): Local sugar mills have decided to halt imports of raw sugar from Australia as a protest against the neighboring country's "unfriendly manner" against Indonesia, a senior government official said here on Tuesday.
Sahat M. Sinaga, director of the agro-based industry division at the office of the State Minister of the Empowerment of State Enterprises, said that Australians' hostility was clearly shown when labor unions rejected the handling of Indonesian goods at Australian ports.
"In addition, some Australian banks have rejected to issue letters of credit to finance goods imported from Indonesia," he said.
"The malevolent responses shown by Australia have gone too far. So, we'd better stop importing sugar in any form from that country," he was quoted by Antara as saying.
Australian unions boycotted goods leaving for and coming from Indonesia in September in an effort to pressure the Indonesian government into restoring order in East Timor.
The unions halted the boycott late last month, but threatened to resume it if Indonesia restricted the multinational peacekeeping force in East Timor.
Wheat millers and textile producers have also decided to shift their raw material imports from Australia to other countries in retaliation of the boycotts.
Indonesia's imports of raw sugar from Australia reached about 320,000 tons from January to October, with a total value of US$56 million.
Indonesia also imports raw sugar from Thailand, Brazil, China and Pakistan. Imports from these countries reached 640,000 tons in the same period.
Sahat said local importers would start looking for a strategy to maintain the supply of raw sugar from other countries.
"It is expected that the government will help importers to find alternative sources for their needs," he added.
Minister of Trade and Industry Rahardi Ramelan pledged last week that the government would help in finding substitute supply sources for local importers who wanted to switch their imports of required raw materials from Australia.
Rahardi was positive that the government would be able to help local importers to continue their business activities amid the threat of a boycott.
Separately, president of state-owned sugar mill PTP Nusantara IX, Bambang Sardjono, called on the government on Tuesday to review its zero import tariff policy on sugar to prevent cheap sugar imports from further flooding the market.
"Indonesia is the only country to impose such a policy, which only caused sugar imports to swarm local markets at a very cheap price. It destroyed the business of local sugar mills and sugar cane farmers," he said.
In compliance with an economic reform package from the International Monetary Fund (IMF), the government on Sept. 1 last year liberalized the importation of sugar and other important basic commodities. Previously, all basic commodities were solely imported by the State Logistics Agency (Bulog).
Bambang said the government would have to impose import duties of at least 80 percent on sugar imports. "And that is even much lower than the level imposed by other Southeast Asian countries," he added.
He said the Philippines applied a 133 percent import tariff on sugar, Bangladesh 200 percent and Thailand 104 percent.
He argued that an 80 percent import tariff on sugar was still well below the level of between 95 percent and 110 percent set by the World Trade Organization at the Uruguay Round.
Indonesia imports about 1.3 million tons of sugar annually, costing $350 million in foreign exchange. Sugar production this year is expected to drop by 31 percent to 1.5 million tons. (cst)