logo logo

Imports of F&B products begin to hurt local producers

The Jakarta Post, Jakarta | Tue, 08/24/2010

Imports of F&B products begin to hurt local producers

Imported food and beverage products have begun to flood the domestic market following the implementation free trade agreements between ASEAN and China early this year, a business executive have said.

Sofjan Wanandi, the chairman of the Indonesian Employers Association (Apindo), said in Jakarta on Tuesday the monthly imports of beverage and foods had risen by 70 percent to US$22 million in June from $13 million in January, when the ASEAN China Free Trade Agreement was fully implemented.

He blamed the influx of imported products not only on the removal of import duties as part of the free trade arrangements, but also on the government’s inadequate protection of local producers.

“Imported biscuits, for example, increased by 1,100 percent in the first semester,” he said in a press conference. “This has caused a 25 percent decline in the local food production,” he added.

Besides biscuits, Sofjan added, imported candies and herbal medicines increased by 1,060 percent and 200 percent.

Most of the imported food and beverage products originated from China and ASEAN member countries such as Malaysia, Singapore, Thailand and the Philippines.

Sofjan said local producers were being squeezed because, in addition to cheaper imported products, local producers were hampered by high-cost economy.

“Domestically, the recent rise of electricity rates has caused production costs to increase,” he said, adding the government’s plan to raise again rates by 10 to 15 percent next year might further result in a further increases to business’ overheads.

Furthermore, he added, poor infrastructure had caused logistic and transportation costs to increase, saying that logistics alone accounted for an estimated 10 to 15 percent of total costs.

“Overseas, logistic costs never exceed 5 percent.”

He said one way to help local producers against the flow of imported goods was consistent implementation of regulations that protect the local market.

For example the government should enforce the regulation requiring the unloading of imports of five commodities — socks, electronics, toys, garments, food and beverage — be restricted to five ports: Belawan in Medan, Tanjung Priok in Jakarta, Tanjung Emas in Semarang, Tanjung Perak in Surabaya and Makassar’s Soekarno-Hatta port.

Another policy that should be enforced is a 1999 government regulation that requires food labels and advertising be displayed in Indonesian.

“Such non-tariff policies, like the use of Bahasa, should be implemented to curb imports,” he said after the press conference.

 source: Jakarta Post