INDONESIAN GOVT EVALUATING DOMESTIC SUGAR TRADING SYSTEM

By Andi Abdussalam

Jakarta, April 18 (ANTARA) - The Indonesian government responded on Thursday to domestic sugar producers' complaint about refined sugar imports which they said would destabilize the domestic sugar market.

        According to Trade Minister Mari Elka Pangestu, the government is currently evaluating the domestic sugar trading system in order to formulate a policy that would accommodate the interest of the consumers, beverage & food industries, sugar industries and sugar-cane growers in a more balanced way.

        Secretary General of Indonesia's Sugar Experts Association (Ikagi) Adiq Suwandi said on Tuesday the sugar industry's condition in the country would worsen in 2008 if the government did not revise its plan to import raw as well as refined sugar.

        The government has tasked state trading company PT Perusahaan Perdagangan Indonesia (PPI) and State Logistics Agency (Bulog) to import sugar from February through April 15. PPI would import 90,000 tons and Bulog 20,000 tons.

        Suwandi's complaint was responded to by Minister Pangestu where the government promised to serve the interest of parties involved in the sugar business in the country.

        "A sure thing is that we will adopt the best policy to more equitably serve the interest of the consumers, food and beverage industries, sugar industries and sugar-cane growers," she said.

        She said that at the present stage the government was still evaluating the implementation of Trade Minister's Decree No. 527 / 2007 on sugar trading.

        The decree bans the circulation in retail markets of refined sugar made with imported raw materials or refined sugar imported by food and beverage industries (for consumers) while allowing the sale of crystallized sugar to consumers.

        The government has launched a sugar mill revitalization program in a bid to speed up the industry's efforts to become self-supporting. However, Suwandi said it was facing a threat.

        The government's program to revitalize domestic sugar mills is facing a threat of failure or may not run as expected if the government did not improve coordination among agencies involved in sugar imports, Suwandi said.

        According to him, the ministry of industry has been issuing recommendations for the importation of raw and refined sugar while the ministry of trade had been issuing permits for their importation.

        "What is happening today is that recommendations and permits are being issued based on the sugar mills' designed capacity, not on real needs in the field. The consequence is an oversupply," he said.

        He said raw sugar imports in 2007 stood at 1.44 million tons while the domestic food and beverage industries' need reached only 900,000 tons.

        In addition, beverage and food industries were still importing 684,000 tons. "It's not surprising that some refined sugar has spilled over into consumers' markets which were actually supposed to absorb locally produced sugar. The impact was that the price of local sugar tumbled," he said.

        Suwandi, who is also associate corporate secretary of state-owned plantation company PT Perkebunan Nusantara XI, predicted that the sugar industry's condition in the country would worsen in 2008 if the government did not revise its plan to import raw as well as refined sugar.

        Data available at Ikagi showed plans to import 1.8 million tons of sugar and 600,000 tons of refined sugar in 2008. In the meantime, local sugar production by 58 sugar factories was estimated at 2.7 million tons.

        Indonesia's sugar production stood at 2.1 million tons last year, well below its sugar consumption estimated at 3 million tons.

        "The price of local sugar will undoubtedly come under pressures if the plan to import raw and refined sugar is implemented," he said.

        But Trade Minister Mari Pangestu assured that the government would pay attention to the interest of all sugar stakeholders.

        "Just wait. We will adopt a policy that is more balanced from the viewpoint of all stakeholders. The interest of all of them are important and they are now being evaluated," the minister said.

        She said the government was for the time being adhering to the existing sugar trade regulations.

        The trade ministry had issued Trade Minister's Letter No.357 / M-DAG/4/2008 dated April 2, 2008 on Distribution of Refined Sugar in the Regions forbidding refined sugar distributors to sell their sugar to retailers.

        The trade ministry also gave refined sugar producers two weeks to change their sugar distribution system so that their sugar would not circulate in and disturb the market for local sugar.

        Refined sugar producers had however acknowledged they were unable to meet the deadline to withdraw the refined sugar they had released into the retail market.

        "We will continue to monitor conditions in the field," Pangestu said adding that her ministry's offices in the regions had been instructed to uphold existing regulations.

        Besides, the government is not planning to extend the period for sugar imports and will thus enforce the April 15 deadline. <br>
        "We have no plan to push back the deadline," Minister Pangestu said here Friday, adding that a extension of the sugar importing period would affect the price of the commodity as the domestic sugar industry would start producing early in May.

        The government has tasked state trading company PT Perusahaan Perdagangan Indonesia (PPI) and State Logistics Agency (Bulog) to carry out sugar imports only until April 15, 2008. (T.A014/A/HNG/a014) (T.A014/A/A014/A/A014) 18-04-2008 00:23:12