ASEAN KEY DESTINATIONS
Govt may allow 2.8m tons raw sugar imports
The government may allow the importation of 2.8 million tons of raw sugar next year to meet the demand from the domestic refining industry.
That indicative figure is based on the government’s estimate on the demand for refined sugar by its top user, the food and beverage industry, which amounts to 2.6 million tons, according to the Trade Ministry’s director general for foreign trade, Partogi Pangaribuan.
“We are using a tentative figure of 2.8 million tons, similar to this year, while awaiting the result of the sugar audit,” he told reporters in a press briefing on Friday.
PT Sucofindo, the appointed surveyor, is now finalizing the sugar audit, which examines the distribution of refined sugar. It also studies whether there is leakage in the consumer market, whose needs are fed by white sugar, processed from sugarcane grown by local farmers. When leakage is found, the government usually lowers the annual import quota for raw sugar to cut down the refined sugar supply.
For example, this year it has trimmed the 3 million-ton import quota by 187,000 tons because of leakage totaling 110,799 tons in 15 provinces last year, which pushed down the price of white sugar and caused injury to the farmers. This is also coupled with the slowdown in food and beverage industrial growth.
To avert similar leakage, the ministry shortened earlier this year the distribution chain of refined sugar to the food and beverage industry. Previously, the type of sugar was traded through distributors and subdistributors before arriving at its industrial customers.
As the food and beverage industry needs a constant supply for production, he said, the government would issue next week the import quota for the first quarter of 2015, which will settle at 600,000 tons.
Separately, Indonesian Food and Beverage Association (Gapmmi) chairman Adhi Lukman said his group required 3.2 million tons of refined sugar to feed operation, a request already submitted to the government. That would be much higher than the government’s indicative figure of 2.6 million tons. Adhi said that figure already included additional demand resulting from the industry’s growth, which is estimated to reach 8 percent.
The food and beverage industry traditionally expands at a double-digit growth rate, but this year it has decelerated, driven by weaker consumption, a situation that may continue next year.
Meanwhile, Indonesian Sugar Refiners Association (AGRI) chairman Wisnu Priyatna urged the government to approve soon import permits for domestic refiners. In line with food and beverage industry demand, the group asked the government to issue import permits for 3.4 million tons. “The supply for January must be shipped this year because the delivery may take 45 days. The import permits must be approved soon,” he said.
Indonesia, Southeast Asia’s biggest sugar consumer, vows to achieve self-sufficiency in sugar within three to four years under the administration of President Joko “Jokowi” Widodo.
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