Sweet deal for local sugar producers

JAKARTA (JP): The Ministry of Industry and Trade imposed new restrictions on sugar imports on Friday in a bid to protect local sugar producers.

The restrictions stipulate sugar can only be imported by Java- based sugar producers which hold import and production permits.

The licensed Java sugar mills will only be allowed to import certain types of sugar. The amount of sugar the mills will be able to import will be decided by the ministry.

"The importers/producers must regularly submit a written report on their sugar imports to the Directorate General for Foreign Trade," the ministry said.

The ministry said the license to import sugar could be obtained from the Directorate General of Foreign Trade. The requirements for the license include an industrial permit, producer importer registration number or limited importer registration number, company registration number and taxpayer registration number.

The new restrictions will be effective from Aug. 5 to Dec. 31 this year.

All sugar imports which are already on their way to Indonesia or whose Letters of Credit or payments are due on or before Aug. 5 are not affected by the new restrictions. The shipments, however, must arrive in Indonesia 30 days after Aug. 5 at the latest.

The ministry said the restrictions on sugar imports were mainly aimed at protecting the domestic sugar industry from an uncontrolled surge of sugar imports, resulting from the government's recent liberalization of its sugar import policy.

The import of sugar was handled solely by the State Logistics Agency until last September, when the government decided to liberalize sugar imports.

The liberalized policy, enacted according to trade reforms agreed to with the International Monetary Fund, also exempts sugar importers from import duties.

As a consequence, imported sugar flooded the local market at a price cheaper than local sugar. The price of local sugar has become much more expensive than imported sugar, particularly after the rupiah strengthened to below 8,000 against the U.S. dollar two months ago. The rupiah's surge to around 6,700 within the last few weeks has further hurt local sugar producers.

To protect farmers from the falling price of sugar on the local market, the government ordered all sugar mills in Java to procure locally produced sugar at Rp 2,500 per kilogram. The government confirmed it would pay the difference between the price of cheaper imported sugar and local sugar. (cst)