Sugar trade must be improved: KPPU

The Jakarta Post, Jakarta

The Business Competition Supervisory Commission (KPPU) has urged the government to revise quickly the regulations on sugar trading as the existing ones have the potential to create unfair competition and trigger the formation of a cartel.

KPPU member Sutrisna Iwantono said on Monday that Regulation No. 643/MPP/Kep/9/2002 issued by the Ministry of Industry and Trade could create unfair competition as it provided opportunities only for particular business players.

"The mechanism on the importation and distribution of sugar -- whether raw, refined or plantation white sugar -- in the regulation could produce an entry barrier for potential players," Sutrisna said.

Sutrisna added that as an alternative to the current sugar policy, the agency had proposed in January three options to curb sugar imports and help local producers.

First, the government could impose import duty on the commodity in accordance with World Trade Organization (WTO) regulations.

Second, the government could establish a quota for imported sugar in order to afford protection to sugarcane farmers and to provide balance in the domestic sugar industry.

Third, the amount and allocation of the quota should be arrived at transparently, such as through an auction.

However, said Sutrisna, the government had not responded to the agency's proposal.

The government increased import duties on raw and white sugar earlier this month. The new tariffs are set at Rp 550 (0.6 US cents) per kilogram for raw sugar (up from Rp 500) and Rp 700 per kg for white and double-refined sugar (up from Rp 600).

Currently, only 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 are licensed to import sugar.

Recently, the House of Representatives urged the government to revise the regulations on sugar trading following an importation scandal involving about 70,000 tons of smuggled sugar.