Weaker rupiah, controls set to hit RI wheat flour imports
Weaker rupiah, controls set to hit RI wheat flour imports
SINGAPORE (Reuters): Indonesia is likely to witness a sharp reduction in wheat flour imports this year as small and speculative grain buyers, hit by a relatively weaker rupiah, shun purchases, a senior industry official said on Monday.
Coupled with that, the Indonesian government is moving closer to imposing tighter controls on illegally imported wheat flour flooding local markets, said Philip Purnama, senior vice- president of Indonesia's biggest wheat importer and miller PT Bogasari Flour Mills.
"Many small flour importers, who were earlier resorting to speculative imports, are giving up purchases due to a weaker domestic currency," Purnama, who is also a board member of the Indonesian Wheat Flour Producers Association, told Reuters in a telephone interview from Jakarta.
The rupiah has lost nearly 16 percent of its value against the dollar since the beginning of 2001 amid a deepening political crisis and pressure from foreign debt payments. On Monday, it was quoted at about 11,250 to the dollar.
"We are already seeing a slowdown in wheat flour imports. Flour imports could fall below 300,000 tons in 2001," Purnama said, adding that Indonesia imported 450,000 tons of wheat flour in 2000.
Purnama said the government had completed its investigation into surging flour imports from the United Arab Emirates, Australia and the European Union.
"The government is in its final stages of quantifying the anti-dumping duties," he said.
Flour imports to Indonesia have soared since 1998 when the market was liberalized in line with an agreement with the International Monetary Fund.
Domestic wheat flour makers have long been urging the government to tighten control over cheap and illegally imported wheat flour, which they claim has flooded the market and hit the domestic flour industry.
Purnama said surging demand for wheat imports due to competitive global prices and growing local consumption of wheat- based products -- such as biscuits and noodles -- would more than offset an anticipated drop in wheat flour imports.
"Wheat imports until now have been according to our expectations. The country has already imported about 1.7 million tons of wheat since the beginning of the year," Purnama said.
Out of the 1.7 million tons imports, some 60 percent came from Australia, 15 percent from Canada, 15 percent from the United States and the remainder mostly from India.
Purnama said the industry was sticking to its wheat imports forecast of 4.0 million tons in 2001 despite a bleak economic and political outlook. Indonesia imported 3.5 million tons of the grain in 2000.
"We don't see any change in market shares of the leading suppliers to Indonesia," Purnama said.
He said wheat imports from India were likely to account for most of the additional demand as it was used for manufacturing cheaper grades of flour. Indonesia did not buy wheat from India last year, but so far this year it has bought about 200,000 tons from the South Asian supplier.
"The domestic problems have not stopped multinationals in the biscuit industry from expanding their capacities," Purnama said. "Three foreign firms have expanded their production capacities in Indonesia." He declined to identify the firms.
Purnama said an anticipated 10-12 percent growth in domestic consumption of wheat-based products would prompt a growth in the output capacity for noodles of about 20 percent in 2001.
The local noodles industry in Indonesia currently uses about 700,000 tons of wheat flour every year.