Sugar policy in place until 2007: Mari
Sugar policy in place until 2007: Mari
The Jakarta Post, Jakarta
The government will maintain the sugar policy of the previous
administration until 2007, despite criticism the policy is
responsible for the rampant smuggling of the commodity.
Minister of Trade Mari E Pangestu said on Thursday that rather
than putting together a stopgap policy to provide short-term
solutions for current problems in the sugar industry, she would
rather work on a comprehensive policy that would establish
medium-term direction for the industry.
She said she was gathering input from various parties on the
policy, which is expected to be issued in 2007.
"We will make a comprehensive medium-term policy that will be
able to accommodate the interests of producers, growers, industry
and the public," Mari was quoted by Antara as saying after a
meeting with Japan's Minister of Economy, Trade and Industry
Shozo Nakagawa.
According to existing regulations, issued by former minister
of industry and trade Rini MS Soewandi, only five companies are
allowed to import sugar: state-owned plantation firms PPTN IX,
PTPN X and PTPN XI, and state-owned trading firms PT Rajawali
Nusantara Indonesia and PT Perusahaan Perdagangan Indonesia.
The policy was meant to protect local sugar growers from a
massive inflow of cheaper imported sugar.
Indonesia, which at one time during the Dutch colonial era was
the world's largest sugar exporter, is now among the world's
largest sugar importers. In 2002, Indonesia produced 1.8 million
tons of sugar, while demand reached 3.2 million tons.
Domestic sugar production has declined over the past several
decades due to the failure to upgrade sugar factories and
sugarcane plantations. Inefficient factories and the declining
productivity of sugarcare plantations are blamed for the higher
price of local sugar compared to imported sugar.
The limitations placed on sugar imports have led to rampant
smuggling of the commodity.
Several parties have urged a review of the country's sugar
policy, including the Business Competition Supervisory
Commission, which believes the policy creates unfair competition
and could lead to the formation of a cartel.
The administration of president Megawati Soekarnoputri
introduced in September 2003 a program to improve the nation's
sugarcane plantations.
Under the program, Megawati's administration planned to
provide Rp 68 billion in grants and Rp 1 trillion in soft loans
per year until 2005 to help sugarcane growers plant their fields
with new high-yield seeds.
"With that money, growers can replace their old sugarcane with
new high-quality seeds to increase output. We hope this program
will help Indonesia become a sugar exporter by 2007," said then
minister of Agriculture Bungaran Saragih.
However, some industry players and analysts argued that the
main problem in the sugar industry was the old machinery still
being used in sugar mills and the mills' inefficient labor force.
However, Bungaran claimed the government did not have enough
money to spend on both seeds and machinery at sugar mills.
"There are over 56 sugar factories in Indonesia. We would need
a large amount of money to upgrade them. We can't do it now, but
maybe in the next two or three years we can. So we have to
prioritize sugarcane seeds," said Bungaran.