Indonesia has cut import duties for white and raw sugar to 400 rupiah and 150 rupiah per kg, respectively, from 790 and 550 rupiah, in order to boost stocks and ease prices, an industry official said on Wednesday. Southeast Asia's biggest consumer of the sweetener is struggling to bring down domestic sugar prices which have surged to a record above 11,000 rupiah ($1.14) in line with global prices.
Tax cuts and additional imports are among measures aimed at easing prices. "Finance Minister Sri Mulayani Indrawati already issued a decree on the tax cut on September 24," said Yamin Rachman, executive director of the Indonesian Sugar Refiners' Association. The new import duties will apply to shipments arriving during the period from October to December, he said, citing the decree. "Indonesia, as part of the ASEAN Free Trade Agreement, should have already cut their import duties.
Obviously, the intention is to control sugar prices domestically but whether it's going to have any effect, it's another story altogether," said a dealer at a trading house in Singapore. "With this duty cut, they will have the capability to reduce prices," said the dealer, adding that Indonesia has been making inquiries to buy sugar from Thailand and Brazil.
Sugar is a politically sensitive commodity in Indonesia where a shortage of essential food items, including the sweetener, triggered food riots in the final years of former President Suharto in late 1990s. Indonesia relies on imported raw sugar to produce high quality refined sugar used in the food and beverage industry but it is scaling back imports of white sugar for direct consumption after local production exceeded demand.
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