ASEAN KEY DESTINATIONS
Raw sugar imports restriction to continue
The government will continue restricting imports of raw sugar amid concerns that the commodity’s leakage to end consumers had distorted prices in Southeast Asia’s largest consumer of sugar.
The Trade Ministry will not allocate raw sugar for border areas, regions in the eastern part of the archipelago or for idle mills — places that are considered prone to leakage to end consumers — as stipulated in a ministry regulation issued late last year.
Imported raw sugar is used to make refined sugar supplied solely to the food and beverage (F&B) industry and a small number of small and medium enterprises (SMEs). The end-consumer market is supposed to take up only white sugar produced by local mills processing local sugarcane.
The Trade Ministry’s import director, Thamrin Latuconsina, said Wednesday that curbing distribution of raw sugar in the aforementioned places was in a bid to better manage the sugar trade and avert spillage into the consumer market, which normally pushed down the price of domestically produced white sugar, hurting local farmers. “To enable the efficient arrangement of sugar imports, we will not give raw sugar to feed idle mills,” he told reporters on the sidelines of a seminar on sugar.
The ministry regulation also prohibits refined sugar from being delivered via distributors or sub-distributors, requiring it to be sold directly by refiners to the major user, the F&B industry.
The government will also further tighten the issuance of import licenses for raw sugar, as it will issue import quotas on a quarterly basis instead of on an annual basis as previously, Thamrin further said.
The government only allowed 600,000 tons of raw sugar imports in the first quarter of this year, as opposed to the 3.4 million tons for the full year demanded by the Indonesian Sugar Refiners Association (AGRI).
For the second quarter, the business group has asked for an allocation of 1 million tons, much higher than the first quarter, as it anticipates much higher consumption by the industry during the fasting month and Idul Fitri festivities in June and July, respectively. Raw sugar importers will also be required to get verification from surveyors appointed by the Trade Ministry to ensure that their quota is appropriate in both volume and quality, he added.
The government earlier tightened the prerequisites for raw sugar importation by engaging three institutions: the Agriculture Ministry, the Industry Ministry and the Trade Ministry.
Indonesian Sugarcane Farmers Association (APTRI) chairman Arum Sabil welcomed the government’s move, saying that import permits had to be strictly for refiners.
“The Trade Ministry’s measures are on track and, with that, it is returning to the right path,” he said.
The latest audit carried out by the ministry, done in January, found that as many as 199,500 tons, or 11.16 percent, of 1.7 million tons of refined sugar made by 11 producers between January and July 2014 went to the market that supplies households.
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