Domestic wheat flour producers have demanded that the Indonesian Anti-Dumping Committee (KADI) probe alleged dumping practices by foreign players in the local market.
The Indonesian Flour Mills Association (Aptindo) filed a petition demanding a probe after realizing that the volume of cheap
imported wheat flour on the local market had increased over the past three years.
The price difference between locally milled and imported flour can reach up to 40 percent, according to the business group’s estimate.
“The significant price margin has resulted in losses in the domestic industry, with some companies seeing declining profit,” Aptindo chairman Fransiscus Welirang told reporters after a meeting with Industry Minister MS Hidayat on Monday.
Once the anti-dumping committee agrees to follow up on the petition, an investigation could affect three countries, namely India, Turkey and Sri Lanka. These countries represent 85.9 percent of wheat flour imports, which reached 205,447 tons last year.
The move could lead to the imposition of temporary anti-dumping duties on imported flour should preliminary evidence of dumping practices be found.
In a recent move, the Trade Ministry announced it would set an import quota on wheat flour totaling 441,141 tons for early May to December.
The quota, which is a safeguard measure against the influx of imported wheat flour, was recommended by the Indonesian Trade Safeguard Committee (KPPI) following a thorough investigation into the case.
Based on KPPI findings, an influx of wheat flour imports has caused considerable damage to local producers represented by four companies — PT Panganmas, PT Lumbung Nasional, PT Golden Grand Mill and PT Berkat Indah Gemilang.
Fransiscus, however, said the impact of the safeguard measure would not be significant enough to help some newly established companies that were struggling with tighter competition resulting from surging imports.
“The quota is still too high and will have a negative impact on new mills,” he explained.
Indonesia saw its consumption of wheat flour, a basic ingredient in noodles and cookies, rise 3 percent to 5.3 million tons last year from 2012.
The needs were mostly met by 29 mills nationwide with total production capacity of 9.7 million tons each year. The remainder was imported.
This year, the country expects sizeable new investments in the construction of five flour mills. The planned mills will be owned by PT Cerestar (located in Medan, North Sumatra, and Gresik, East Java), PT Bungasari (Cilegon, West Java), PT Mayora (Cilegon) and PT Wilmar (Gresik).
In response to the petition, the Industry Ministry’s director general for agriculture-based industry, Panggah Susanto, said an investigation would be necessary to assess the real condition in the market.
He added that unfair imports could hamper the domestic industry in achieving its full potential as it had lost its competitive edge.
“Utilization of the overall production capacity is 60 percent. We could push up this rate to a higher level with a more conducive business environment,” he added.
Source:- thejakartapost.com
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