Sugarcane farmers blasts misuse of import facility

JAKARTA (JP): Dozens of sugarcane growers staged a rally at the House of Representatives building on Monday, asking the government to annul the special low import duty facility enjoyed by certain companies, saying some of them had misused the facility by reselling imported sugar on the domestic market rather than using it as a raw material in manufacturing processes.

Mohammad Arum Sabil, chairman of the Association of Indonesian Cane Growers said that the reselling of cheaper imported sugar had created pressure on the price of local sugar, causing sugar farmers to suffer.

"Our findings show that some of them (the companies) resell imported sugar in the domestic market, causing a decline in sugar prices," Arum told reporters after his association lodged its complaint with House of Representatives Commission III overseeing agriculture and food affairs.

The government has established a low import duty of between zero and five percent for local companies using sugar as a raw material in manufacturing processes to protect local industries from stiff international competition.

But it also imposed a 25 percent duty on imported sugar to protect local farmers against cheaper imports.

The high import duty will not be changed, even if the trade liberalization agenda in the Southeast Asian region becomes effective next year.

Indonesia and the Philippines have been allowed by the ASEAN Free Trade Area Council to delay the sugar import tariff cuts for several more years before lowering them to a maximum of five percent in 2010.

However, Arum said that the lower import duty facility given to certain companies was prone to abuse.

"The government must take stern measures to punish those firms misusing the facility. Otherwise, those companies will flood the country's sugar market with cheap imported sugar, putting further pressure on domestic sugar prices," he said.

Arum said the price of raw sugar had fallen to between Rp 2,900 (30 U.S. cents) and Rp 3,100 per kilogram (kg) today, from about Rp 3,700 per kg in July.

Meanwhile, Kompas daily reported on Monday similar findings by a joint supervisory team on sugar.

The team found that chocolate and candy maker PT Insan Boga Sejahtera had imported 25,200 tons of raw sugar, while it was allowed only to import refined sugar as raw material for its chocolate products and candies.

Awal Kusuma, a legislator from the Golkar party who chairs the House's commission III promised to help resolve the problem.

"We will ask the government to heed your complaints. Hopefully, this problems can be quickly resolved," Awal said.(dmr)