INDONESIA: No end in sight for country’s sugar troubles
Published: 07/10/2012, 12:31:21 PM
A major business lobby group says the government's failure to expose a cartel in the sugar industry and its inability to reconcile overlapping interests among government agencies in the sector mean there is no end in sight for the nation's problems in the supply of the vital food commodity, according to Indonesia's Jakarta Globe newspaper.
The Indonesian Chamber of Commerce and Industry (Kadin) also claimed that the ministries of industry and trade lacked decisiveness and transparency in applying sanctions on parties that leaked white sugar - meant only for sale to commercial buyers - into the retail market.
"The government has not been able to manage the country's sugar production, distribution and trade," Kadin chairman for trade, distribution and logistics affairs Natsir Mansyur said on Friday.
Local sugar producers have complained for years of the lack of supply of white sugar. They blamed the leakage of refined sugar, which is imported to supply the food and beverage industry, into the retail market.
About 50% of the country's sugar demand is met through imports. But the leakage of imported sugar into the retail market is hurting sales of white sugar produced locally and sold at a higher price.
The country's white sugar demand is estimated at five million tonnes annually, while its production is about 2.5 million tonnes.
The country faces sugar problems because the supply and demand are not balanced, Natsir said.
"This is worsened by the fact that the House of Representatives has not carried out its supervisory function, and the Business Competition Supervisory Board [KPPU] is still having trouble uncovering the sugar cartel," Natsir said.
KPPU chairman Tresna P. Soemardi said a lack of funding limited the agency's ability to investigate allegations of cartel behavior.
Activist group Clean Indonesia Movement (GIB) expressed discontent over the government's handling of the sugar problem. It questioned the legality of the appointment of Indonesian trade firm PPI as the sole importer for 240,000 tonnes of raw sugar in May in the eastern section of the country.
GIB said the government broke the law. GIB coordinator Adhie M. Massardi has reported Trade Minister Gita Wirjawan, other Trade Ministry officials, and PPI president director Heynrich Napitupulu to the Corruption Eradication Commission (KPK) for collusion.
Adhie said a ministerial decree issued in 2004 states that any importer must also be a producer, but PPI is solely an importer. Gita denied the allegation, saying the ministry's action followed advice from the Indonesian Sugar Council (DGI), which is comprised of government officials and sugar producers.
Council members include the Industry Ministry, state procurement agency Bulog and the Indonesian Sugar Association. "It was the Indonesian Sugar Council that decided to import sugar, not the Trade Ministry," Gita said.
DGI estimates that as of May, Indonesia had white sugar stocks at 598,932 tonnes. Demand is estimated at 860,000 tonnes for 2012.