Indonesia could slap a tariff of 20 percent on imports of wheat flour within less than three months, an industry association said on Friday, as Asia's top importer of the grain moves to protect its growing wheat mill industry. Indonesia's trade ministry is investigating whether imports of wheat flour breach international trading laws against dumping.
"The government will probably impose a duty on imported flour," Franciscus Welirang, chairman of the Indonesian Wheat Flour Mills Association (APTINDO), told Reuters. "It is now 5 percent but 20 percent would be a good level." "The new mills will really be affected by these (flour) imports," he said, adding that a decision from the government would take roughly 90 days. "It could cause irreparable damage."
Government officials were not immediately available to comment on Welirang's remarks. Southeast Asia's largest economy used more than 6 million tonnes of wheat in 2011, including imports of about 5.5 million tonnes of the grain and about 680,000 tonnes of wheat flour, APTINDO says.
Turkey is the largest exporter of wheat flour to Indonesia, accounting for about 60 percent of the country's imports, with Sri Lanka making up around 30 percent and Belgium, Australia, Japan and Ukraine often supplying the rest. Economic growth in the archipelago is expected to rise by more than 6 percent this year, and this wealth is changing consumer tastes towards bread and noodles.
A sign of Indonesia's increasing demand for wheat flour is the rising number of domestic flour millers, which Welirang said numbered 20, with installed capacity of 7.9 million tonnes. Two of the four more mills now under construction are being built by Singapore's Wilmar International Ltd, Welirang added. Most Indonesian wheat mills are in Java, with the biggest being owned by Bogasari Flour Mills in Jakarta, with a capacity of 3 million tonnes a year.