Indonesia, Southeast Asia’s biggest sugar consumer, plans to import 2.27 million tons of raw sugar next year, up by 8.1 percent from 2.1 million tons estimated for this year, in a bid to meet the surge in refining capacity of local sugar mills, a senior trade official says.
The Trade Ministry’s acting director general for foreign trade, Bachrul Chairi, said here on Friday the sugar import allocation was based on a thorough assessment that took into account factors like the real needs of the domestic sugar refining industry, partly to avert leaks to the consumer market.
“We have given permits to eight sugar refiners on the grounds of their import performance according to the quota provided for them,” he told reporters at his office.
Imported raw sugar is distributed directly to the refined sugar industry, which will process it into refined sugar for the food and beverage industry. Indonesia imports around 85 percent of its raw sugar from Thailand and Brazil.
In contrast, the so-called white crystal sugar industry uses sugarcane sourced from local plantations for its production with the output going directly to the consumer market.
However, the imported raw sugar is often leaked to the consumer market, pushing down prices of locally-sourced sugar. Last year, for instance, raw sugar importer Makassar Tene was proven guilty of selling the commodity to the consumer market. The trade ministry then reduced its import quota as a penalty.
Suryo Alam of the Indonesian Sugar Refineries Association expected the government could increase the quota of raw sugar later as the food and beverage industry demand for refined sugar was projected to reach 2.7 million tons next year.
“For next year, the largest part of our needs, between 60 percent and 70 percent of the total 2.27 million ton quota, will be delivered in the first six months. But if needed, we hope the quota can be increased,” he told The Jakarta Post.
Suryo said local sugar refining capacity would rise by 30 percent to 4.2 million tons next year as three new refineries would likely commence operations to tap into growing demand from the domestic food and beverage industry.
At present, Indonesia has eight sugar producers including state-owned PT Perkebunan Nusantara (PTPN) II and PTPN VII, PT PG Gorontalo and PT Pemuka Sakti Manis Indah, with a total production capacity of 3.2 million tons.
The sugar refineries run at a utilization rate of 70 percent, but this rate will possibly plunge to 60 percent as there will be more competition in absorbing imported raw sugar, according to Suryo.
Contacted separately, the Industry Ministry’s director general for agriculture and chemical industries, Benny Wachjudi, said that in addition to the raw sugar import plan, the government would also import about 75,000 tons of refined sugar for the local food and beverage industry. The figure slipped by 16.67 percent from 90,000 tons allocated for this year.
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