Monday, 23 September 2019

Scrap Import Quota

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  • TEMPO.CO, JakartaThe trade policy for foodstuff import has long been a source of corruption for many political parties. Local consumers and farmers benefit little from the policy.

    The arrest of I Nyoman Dhamantra, a lawmaker from the Indonesian Democratic Party of Struggle (PDI-P) last week has shed further light on the extent of corruption surrounding foodstuff import in this country. Loopholes in the import quota system of the trade ministry and the permit scheme of the agriculture ministry have evidently allowed room for the import cartel to reap billions of rupiah in profits.

    The sting operation by the Corruption Eradication Commission (KPK) last weekend should be lauded; however, the KPK must not yet rest on its laurels. Those who are now in the lockup are only a part of a gang of field operators. The key players who facilitated the collusion by issuing import permits and quota are still on the loose. Once again, KPK’s bravery and independence are tested.

    In his position as a House of Representatives member, I Nyoman Dhamantra, who was nabbed at the Soekarno-Hatta airport on his early return from PDI-D’s fifth congress in Bali, was said to have taken kickbacks from a group of garlic importers. The bribe was given by Chandry Suanda alias Afung, the owner of Cahaya Sakti Agro, who is also in custody along with their accomplices.

    Afung wanted Nyoman to use his influence as a trade commission member at the House to push the government to approve his companies’ imports. The money he gave, Rp2 billion, was just a down payment out of Rp40 billion grease money he promised to Nyoman if he could get an import quota of 20,000 tons garlic. That in fact was a small amount compared to the total omzet of Rp1 trillion Afung wound make if he could sell the commodity at Rp50,000 to 60,000 per kilogram.

    Windfall profit from this food import game is indeed extraordinary. Armed with just permits and quotas, local importers can do price-fixing for limited commodities on the market. Imagine that the imported garlic that is priced at Rp10,000 per kilogram at the port can jump to Rp50,000 per kilogram when it reaches consumers. Ahead of the last fasting month, the price went through the roof reaching Rp100,000 per kilogram.

    All this time, the government argues that the import quota policy is needed to protect the production of local farmers and that it is critical to maintaining the stability of food prices to protect the poor with low buying power. Alas, all these reasons seem nothing but pretexts. It is consumers who ended up being disadvantaged by overly inflated prices.

    In addition, our farmers will never be able to grow garlic on a large scale albeit its high price. As a sub-tropical plant, garlic cannot grow in most Indonesian soil. As a result, local garlic production only hovers around 16,000 tons annually, far below than the annual national demand of 500,000 tons. That’s where brokers come in to play.

    President Joko Widodo should not watch this situation in silence. The trade policy for food commodity import at the agricultural and trade ministries should be immediately eliminated especially after it has been proven that politicians and parties have ties to many local importers like Afung. Scrapping the quota system will not only root out the import cartel, but also shut down one of the many sources of political corruption in this country.

    Read the Complete Story in this Week's Edition of Tempo English Magazine