Sugar mills boycott imports from Australia

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)