JAKARTA: A government official in Indonesia reported Tuesday 25 Oct., that the country may abolish the licensing system for importers of some food commodities and put in place a tariff system in order to open its economy.
“At this moment, we are reviewing the trade regime for important commodities such as rice, sugar, beef, chillies, onions and two other commodities,” Denni Purbasari, deputy chief of staff at the executive office of the president, said during the launch of the World Bank’s Indonesia Economic Quarterly report.
“We are looking at the possibility of changing from licensing regime to tariffs, such that everybody can play to import the commodities,” she said.
Indonesia’s food trade restrictions and other policy interventions impose a massive “tax” on consumers, the World Bank said in the report.
In 2015, the cost burden from the system on Indonesian consumers was estimated at $36 billion, much higher than the $22 billion estimate for the entire European Union, the report said.
Currently, the Indonesian government has a quota system for the import of food commodities it considers important. Only the state procurement agency Bulog is allowed to import non-premium rice. Importation of white sugar is limited to state-owned companies appointed by the government.
The import quota is decided, based on domestic food production data, compiled by the Agriculture Ministry. But ministry officials routinely inflate the rice production data to present a rosy picture to the government to keep farm subsidies flowing, a senior government official told Reuters earlier this year.
The World Bank said Indonesia needs to rebalance its food security policy, highlighting, not only the trade barriers on some commodities, but also the government’s approach on public spending to increase productivity.
