Govt slaps 20% import duty on flour

JAKARTA. The Finance Ministry has put a provisional import duty of 20 percent on imported flour following an investigation by the Indonesian Trade Safeguard Committee (KPPI) into alleged unfair trade practices that have affected local industry.

The additional duty will add to the existing 5 percent import duty on all producers. “The imposition of this temporary safeguard duty will last 200 days after this ministerial rule takes effect,” Finance Minister Agus Martowardojo said in his ruling issued last week.

The request for the provisional additional duty was submitted by industry players who expected necessary measures to be put in place to curb imported flour sold below market prices, which they said would disadvantage local flour mills, particularly newcomers.

The measure is considered necessary to help local industry thrive amid heightened competition from cheap imports flooding the market during the period of investigation by the authority.

The duty, introduced within the period of a formal investigation, is legal under World Trade Organization (WTO) rules.

Indonesian Flour Mills Association (Aptindo) executive director Ratnasari Loppies welcomed the decision of the finance minister and said that this measure would create a more conducive business and investment climate in the country.

“The application of a 20 percent safeguard duty is very positive for business in Indonesia amid global free trade,” Ratnasari said. “It comes at the right time to avert the collapse of local industry, during a long period of investigation that could last 18 months.”

The trade protection committee started an investigation into wheat flour imports in line with a petition filed by flour producers under the Aptindo, including PT Panganmas, PT Lumbung Nasional, PT Golden Grand Mill and PT Berkat Indah Gemilang.

The companies said they were forced to sell their flour at a price lower than actual production costs. They also had to maintain production to avert layoffs, which they said caused significant losses to their business.

Indonesia is an importer of wheat and wheat flour. The additional duty is set to hurt imports of flour from Turkey, the biggest source of Indonesia’s wheat flour. (Linda Yulisman/The Jakarta Post)