INDONESIAN CHAMBER OF COMMERCE AND INDUSTRY ALERTS AGAINTS SMUGGLING IN BORDER AREAS WHICH REACHES 10% OF SALES TURNOVER OF FOOD AND BEVERAGE INDUSTRY

            The Indonesian Chamber of Commerce and Industry (KADIN Indonesia) urges the government to evaluate trade regulations in border areas, such as the area between Indonesia and Malaysia. This is important considering that the existing regulations are not suitable to be applied in border areas. Indonesia and Malaysia have signed a Border Trade Agreement since 1970. Not only for consumption purposes, but based on the regulations, community in border areas receive special treatment to trade goods with value of border trade on land at RM 600 (Rp 1.7 millions)/ month/border pass (PLB) or on sea at RM 600/shipping/PLB.

            “The regulation is mush enjoyed by Indonesian citizens. Not only for daily needs, but also for retrade. But, there is no firm control on border area so that there are many smuggling cases happening”, said the regent of Sanggau (West Kalimantan), Setiman H. Sudin. He said that the difficulty in getting locally produced basic necessities is due to high cost, infrastructure problem, and other problems so that goods from neighboring countries are cheaper than local goods.

            This includes basic necessities, such as sugar and other. “Sugar demand in Kalimantan reaches 6,000 tons and border area could receive 30 percent. Circulation of smuggled food and beverage products reaches around Rp 60 trillion a year or around 10 percent of total sales turnover of food and beverage industry”, he said.

            KADIN Indonesia is currently encouraging evaluation of regulations on border areas because border areas are the gateways of some commodities, especially sugar for consumption and other foodstuffs from overseas. On the other hand, there was less supply of sugar and other foodstuff from Java due to distance problem and inadequate infrastructure.

            On the other hand, circulation of commodities where a major part of them are illegal must be disciplined. But, there has to be a policy from the government to fill unavailability of product, especially sugar and other basic necessities. “All regulations should be improved so they will not be misused”.

         If import regulations are clear, it can be obeyed and used according to requirement accompanied with control”, said Vice General Chairman of KADIN for Central Region Coordinator, Endang Kesumayadi. She considers that to meet demand in border areas, there has to be special treatment and understanding. “We ask the government to pay attention to this matter, and soon we will coordinate with all parties and will send a letter to the Trade Ministry so that daily needs on border areas will receive attention”.

         Concerning this matter, the Regent of Sangau said that his party has allocated 30 hectares of land for construction of dry port. “We need the support of all parties, including the central government, especially related to clarity of Border Trade Agreement regulating (the use of border pass) and trade regulations on border areas if the dry port has been ready for use.  

 Business News - March 26, 2012