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Angels products wins tender for 56,343 tons of illegally imported sugar.

The controversy continues over the auction of 56,343 tons of illegally imported sugar. The North Jakarta prosecution office announced that the auction had been won by PT Angels Product, the pioneer in the industry producing double refined sugar in the country. According to acting director of Angels Product, Melvyn Korompis, the company will sell the sugar at a market price level. The chairman of the association of producer of double refined sugar (AGRI) also denied alleged collusion and corruption in the auction process held by the North.

As the winner of the auction, Angels Products will sell the sugar by observing the minimum price set for farmer sugar at Rp 3,410 per kg although the auction price it was to pay was only Rp 2,100 per kg. Angles Product was to pay only Rp 140 billion to win the auction including the warehouse fee. Later as the auction price was too low the company agreed to increase the price to Rp 4,410 per kg including warehouse fee, auction fee value added tax and import duty.

The chief legal spokesman of the Attorney General office said he could not give comment on the decision of Angels Product to raise the price before a meeting involving a number of related government agencies announces its decision. He said in addition he did not know the proper legal mechanism to applied to such case with the change in the price.

Meanwhile, the general chairman of the Coordination Body for the association of sugar farmers (BKAPTRI), said the decision of Angel Products to raise the price would not solve the problem. In addition there is no guarantee that the company would sell the sugar only in Sumatra and Kalimantan as it has said. It could use the sugar as feedstock to produce manufactured food and beverages to be sold in Java.

He said there was information that 8,300 tons of illegally imported sugar of Angels Products have been offered to a number of sugar distributors in district areas in Central Java and Cirebon. With a price of Rp 4,100-Rp 4,200 per kg. The chairman of BKAPTRI said further that six of 56 distributors in the district and sub-district area sin Central Java have received offers from Angels Product to buy up to 10 tons of illegally imported sugar. The sugar offered by that company was stored in its Hobros warehouse and has been moved to warehouses in Pluit and Mayora. Meanwhile, 14,750 tons of sugar stored in the BR warehouse put in 16 containers in the Tanjung Priok port will be sold in Sumatra.

Currently the price of sugar in Central Java is around Rp 4,150 per kg at the level of retailers or around Rp 200-Rp 300 lower than the price of import by registered importers with a price of Rp 4,400-Rp 4,500 at the Indonesian ports. The price difference would be higher when the prices of imported sugar will reaches around Rp 4,900-Rp 5,200 per kg at the end users.

With the high difference of prices between sugar imported legally by registered importers and that of Angels Products the price structure in Central Java will be distorted.

Angels Product denied the allegation about selling illegally imported sugar in Central Java saying it will prepare a contract banning the sales of the sugar in Java. The Domestic Trade Director General also said the license to sell the 56,343 tons of illegal sugar is still being processed.

Imported sugar entering the market

Amid the controversy over the auction of illegally imported sugar, registered importers have imported sugar. PTPN IX has imported 1,800 tons of sugar via the port of Tanjung Emas, Semarang. By the end of January, 2005 it is to import again 1,500 tons. Meanwhile, local producers is expected to be out of stock in mid February.

Another registered importer PTPN XI has also imported 6,250 tons of sugar from Thailand via Tanjung Perak, 10,000 tons via Tanjung Perak and 3,750 tons via Tanjung Emas.

The import license for first phase ended on Jan. 24, 2005, the second phase to end on Feb. 15 and the third phase on March 30, 2005.

The import license is given to registered importers including PTPN IX, X, XI and PT Rajawali Nusantara Indonesia. Out of five registered importers only PT Perusahaan Perdagangan Indonesia (PPI) which has not received import license. In the first phase, PTPN IX was given a license to import 17,400 tons, PTPN X 45,300 tons, PTPN XI 48,450 tons and PT Rajawali Nusantara Indonesia 38,850 tons.

Sugar smuggling still rampant?

Low productivity necessitates imports of sugar. In 1975, 12 tons of sugar were produced per hectare but now the production is only 5.9 tons per hectare. Local production, therefore accounts for only 2.05 million tons of the total requirement of 3.4 million tons in the country.

The association of sugar growers (APTRI) said sugar smuggling into the country is still rampant and may continue unless the government takes firmer action against smugglers. In 2004, imports were only 20% or 120,000 tons of 600,000 tons of sugar allowed to be imported by the government to cover shortage in domestic supply. The rest were believed to be imported illegally.

The government agencies also lack coordination in handling domestic issues such as the controversial auction of illegally imported sugar. Related government agencies including the trade ministry and the attorney general office have issued conflicting statements confusing the public.
Table-1
Allocation of imports of white sugar
by registered importers, 2005

 (Tons)
Registered Import license Import license Import license
importers First phase second phase third phase

PTPN IX 17,400 11,600 5,800
PTPN X 45,300 30,200 15,100
PTPN XI 48,450 32,300 16,150
PT RNI 38,850 25,900 12,950
Total 150,000 100,000 50,000

Source: Trade Ministry

Table-2
Production of sugar from 2003/2004 planting season and
prediction for 2004/2005 planting season

Sugar factory Area Cane milled
 (hectare) (ha)

In 2003/2004: 213,236 16,978
Java
Outside Java 132,314 9,764
Total/average 345,550 26,742
In 2004/2005: 222,647 17,660
Java
Outside Java 138,577 10,426
Total/average 361,224 28,087

Sugar factory Sugar crystal Per ha
 (Ton/ha) (Ton)

In 2003/2004: 7.10 1,206.2
Java
Outside Java 8.66 845.4
Total/average 7.67 2,051.6
In 2004/2005: 7.30 1,289.7
Java
Outside Java 8.76 913.8
Total/average 7.85 2,203.5

Source: Department of Agriculture
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Title Annotation:TRADE
Publication:Indonesian Commercial Newsletter
Date:Jan 25, 2005
Words:1117
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