Indonesia is considering cutting an import duty on raw and white sugar to ease local prices, which have hit records in line with global sugar prices, a senior economic official said on Monday. "That is the most likely step the government can take. Import duty is also a factor making prices of local sugar equal to imported sugar," said Bayu Krisnamurthi, deputy to co-ordinating minister for the economy.
London white sugar notched an all time-time high of $589.90 a tonne on August 13. The sugar price rally has been driven by strong demand from top consumer India and weak global supply. The government now charges an import duty of 790 rupiah ($0.792) per kg on imported white sugar and 550 rupiah per kg on imported raw sugar.
Indonesia, traditionally one of Asia's biggest buyers of the sweetener, is scaling back imports of white sugar for household consumption as domestic output now exceeds consumption. But the price of local white sugar, which tends to follow the global price, rose to fresh record above 10,000 rupiah per kg last week, boosted by fears that domestic food and beverage firms are chasing local white sugar. Yamin Rachman, head of Indonesian Sugar Refiners Association, said state sugar millers have ignored a trade minister's decision early this month to set a ceiling for ex-farm gate sugar price of 6,500 rupiah per kg.