After three years of hard negotiations, local flour producers have finally filed a lawsuit against the Finance Ministry for refusing to impose an anti-dumping duty on flour imports from Turkey, as recommended by the Trade Ministry.
The lawsuit, which was filed on Jan. 25 by the Indonesian Flour Mill Association (Aptindo), is seen as a direct challenge to President Susilo Bambang Yudhoyono, who according to a letter signed by Cabinet Secretary Dipo Alam on July 11, 2011, demanded the Finance Ministry postpone the duty as required by a bilateral agreement between Indonesia and Turkey.
Aptindo argues that the ministry’s inaction contradicts the findings of the Indonesian Anti-Dumping Committee (KADI), which carried out a one-year investigation against the dumping allegation.
According to the investigation, Turkey exported flour to Indonesia with a lower price that was between 18.69 and 21.99 percent compared to the price in its domestic market.
On Dec. 28, 2009, KADI submitted its findings to the then trade minister Mari Elka Pangestu, who recommended the imposition of an anti-dumping duty on Turkish flour.
According to a copy of the Cabinet secretary’s letter, which was obtained by The Jakarta Post, Finance Minister Agus Martowardojo had requested advice from the President regarding the import duty request.
“Based on instructions given by the President to the minister and trade minister, the postponement of import duty implementation on imported flour from Turkey had been part of an agreement between the two heads of state.”
“Furthermore, we hereby inform you that should such a technical matter fail to be resolved, it is best that it is not burdened on the President,” Dipo said in the letter.
Aptindo questioned the President’s decision as Turkey was among a few countries that repeatedly issued protective trade measures, including anti-dumping duties, anti-dumping circumvention and safeguards against around 16 kinds of Indonesian products, including polyester, apparels, footwear and tire.
The absence of an anti-dumping duty has caused a potential loss of Rp 69.12 billion to the state coffers from the additional tax, according to Aptindo.
Dipo’s letter also stated: “To solve various trade problems between RI and Turkey, especially on the issue of flour imports from Turkey, we need to study it deeper while continuing to push for the possibility of having a free trade agreement between Indonesia and Turkey as has been done by Malaysia and Turkey.”
Indonesia bilateral trade with Turkey stood at US$1.73 billion during the January-November period last year, up 40.31 percent from the same period a year earlier. Indonesia exported $1.31 billion and imported $411.65 million worth of goods.
Indonesia imported 674,640 tons of flour in 2011, out of which 57 percent came from Turkey.
Alfin Arifin, the president director of Semarang-based flour mill Sriboga Ratu Raya, one of the petitioners, said on Thursday in Jakarta that the imports from Turkey had created unfair competition for domestic producers.
“How can we compete with the imported flour when its price is the same as the wheat we use? It’s so unfair. If this condition continues, we’ll collapse,” he told reporters.
Aptindo executive director Ratna Sari Loppies said that according to her estimation, Turkish flour had to be priced at $518 per metric ton, or Rp 116,550 per 25-kilogram-sack ($12.94), after including various components, including wheat price, production cost, freight cost, import duty and value-added tax. However, it was currently sold at between Rp 96,000 and Rp 97,000 per sack in the domestic market.
“So, the normal price will be reached if the 20 percent anti-dumping duty is added as suggested by KADI,” she said.