The Indonesian government has agreed to lower the tariff on Australian raw sugar to 5 percent from 8 to 13 percent when the Industry Ministry issues a related regulation in October.
Trade Minister Enggartiasto Lukita said there would not be an increase in the raw sugar import quota this year but the policy would provide options for importers to buy more from Australia, in addition to Thailand, the biggest sugar exporter to Indonesia.
Indonesia has agreed to reduce tariffs on Australian raw sugar imports to 5pc in exchange for eliminating import duties on Indonesian herbicides and pesticides as part of moves towards securing a new free trade deal.
“The raw sugar tariff [for Australia] will be 5 percent, the same rate we apply to Thailand, so [Australian sugar] can be more competitive. It is important because we don’t depend only on one country,” he said at a press conference during the visit of Australian Minister for Trade, Tourism and Investment Steven Ciobo to the ministry on 20 September.
Mr Ciobo said the tariff cuts reflected “our shared ambition” for completing the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
Indonesian pesticides and herbicides are expected to be more competitive in the Australian market and offer greater choice to consumers, while Indonesia’s processed food and beverage industries are set to benefit from lower raw sugar prices in meeting the demands of national and regional markets, the ministers said in a statement.
Mr Lukita said Indonesian President Joko Widodo and Australian Prime Minister Malcolm Turnbull – who revealed the farm trade exchange during talks in February – were “determined” to conclude IA-CEPA this year and “we are doing all we can to make that happen”.
Australian Sugar Industry Alliance Chair and Chair of its Trade Committee Paul Schembri said his group was looking forward to Indonesia being restored as a major export destination for Australian raw sugar.
Agriculture and Water Resources Minister Barnaby Joyce said the tariff reduction would increase the competiveness of Australian sugar exports into the important Indonesian market, while strengthening opportunities for Australia’s $2.2 billion sugar export industry.
“This is great news for our sugar industry, but it also demonstrates the strong trade relationship we share with Indonesia,” he said.
The new policy will be included under the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA).
Indonesia depends on raw sugar imports, mostly from Thailand, to fulfill its household and industrial needs. This year, the ministry estimates that the country will import 3.5 million tons of sugar out of the national demand of 6.2 million tons.
To lessen its dependence on imported sugar, Indonesia will introduce various incentives for local sugar industry players and planters. (bbn)