Monday, 7 January 2013


Commission IV of Parliament was hoping the Government would prude on the possibility of restricting or even totally closing import valve of salt although by calculation the domestic supply of salt was not sufficient. Commission IV on the other hand called for the of mass media to constantly give input on salt importing problem which seemed never end. “I hope the public including media participate in solving salt importing problem and find the right solution” Herman Khaeron of Commission IV of House told Business News sometime ago.

By calculation of Commission IV of House, industry and households at home still needed 1.8 million tons of imported salt. The amount was barely sufficient to maintain stock of sugar. Consumed sugar for household was needed at least at 1.4 million tons. Farmers’ production output was only around 1.1 million tons, meaning the remaining 300 tons was still a big question “We still need imported salt, so regulation is necessary to protect the domestic salt industry. Imported salt should be walled out or not permitted to enter certain zones. That, in our opinion, is most important” Herman Khaeron remarked.

In a different location, the Ministry of Trade underscored that salt importing was already closed. The Ministry of Trade was also not sure that there were some infiltration of industrial salt for salt for consumed salt. The logic of it was that most of industrial salt were used by companies like oil drilling companies and paper industries. “Revenues of oil drilling companies or paper producers like Sinar Mas may come to billions of USD, so it is most unlikely that they buy salt for reselling. It doesn’t make sense, so we are absolutely sure there is no infiltrated industrial salt.” The Directorate of Overseas Trading Deddy Saleh disclosed to Business News [21/9].

Import of sugar which had begun was already quality based so it would not disadvantage domestic consumers. If the quality was good, the Ministry of Trade was certain that the price could be above Government Fixed Price [HPP]. On the contrary of the quality was bad, the industry might reject. So far there had been some companies who managed table salt, not industrial salt. “Program of the Ministry of industry was also good to jack up farmers’ production output. They made geo membranes and ceramics system, evidently it succeeded in jacking up salt price” Deddy Saleh remarked.

Regulations for registered importers [IT] was already made for BUMN companies specializing in salt business, but the state-owned companies [BUMN] was not comparable to PT Garam because the Ministry of Trade saw that the Government could set up another BUMN which was entitled to IT [listed importer] rules. The Ministry of Trade believe that the present trading system for salt was already proper, BUMN companies could be easily  controlled by the Government rather than private salt-importer companies. “We will not issue other IT permits to other than BUMN dealing with salt business” Deddy Saleh remarked.

Meanwhile the Ministry of Maritime and Fishery Affairs [KKP] monitored three salt center locations in Pamekasan, Sumenep and Sampang; price of salt range from Rp150 – Rp250 per Kg. All types and quality and price levels were priced the same, which had its impact on discouraged embankment operators to Improve their quality of salt. KKP planned to standardize quality of salt to determine price objectively for embankment operators. “Quality standardization of salt is meant to prevent collectors and brokers to one-sidedly evaluate salt quality at embankment level.” The Minister of Maritime and Fishery Sjarif C. Sutardjo told Business News [21/9].

The role of collectors and brokers in determining selling prices was also very prevalent. The result was that quality classification of salt at salt makers level was not exercised so all grades of salt were priced the same. Up to September 13, 2012, the KKP team noted that there was no transaction or absorption of salt production by companies through the season of 2012. And yet up to September 14 2012 production of people’s salt at salt centers had reached 668,865,45 tons but only 282,457,42 tons was absorbed which means only  411,218,89 tons of stock was left. This was on account of two things: there was still stock of salt at PT Garam warehouse as remains of the harvest of 2011 amounting to 18,403 tons and the price of salt at embankment level was extremely low, below HPP price so embankment operators were not willing to sell their salt at that price level. “The low price of salt selling price made 16.035 tons of people’s salt in Sumenep and Sampan left unsold” The Minister remarked.

KKP had previously stated their consistent commitment in maintaining price stabilization of salt in the market. The intention was realized by making it compulsory for importers of consumed salt to absorb people’s salt at least 50 percent of their total importing to prevent penetration of industrial salt to the consumed salt market. In addition to that, KKP also made it mandatory for Producer-Importer [IP] to accommodate people’s salt amounting to 100percent of import quota before they could do any importing. “Imported salt which had already arrived may not be sold at home before any people’s salt was absorbed so the price of people’ salt would remain stable in accordance with HPP” The Minister concluded.

Salt importers must first absorb local salt before they were allowed to import salt, the Minister said. The policy, according to Sjharif, could step up absorption of people’s salt, so in case they were not totally absorbed price of salt could remain to be safeguarded in accordance with HPP price. However he regretted that there were stock of salt at embankment’s level piled up as much as 27 thousand tons. “Those are left over stock from people’s salt production in 2011 amounting to 139.545 tons”

The Government had stipulated basic price of salt which was considerably high, much higher compared to 2009. The basic buying price of salt [HPP] set by the Government in 2011, i.e. Rp750 thousand/Kg for first grade salt and second grade salt was set at Rp550,- per Kg. To maintain price of salt at embankment level and energize local embankment operators KKP had proposed prohibition of salt importing. “HPP of salt aimed at promoting welfare of embankment operators whereby to spur on salt production at home.”

The prohibition to import salt was put in effect toward salt harvesting in one season which lasted for 90 days starting from August till October. Supposedly the basis of agreement of four ministries, i.e. the Ministry of industry, the Ministry of Trade, the Coordinating Ministry of Economy and the Ministry of KKP. As noted total national demand for salt in 2012 was posted at 3.2 million tons including 1.8 million tons for industrial salt and 1.4 million tons of consumed salt.

Data of the Board of Meteorology, Climatology and Geophysics [BMKG] and related Ministries mentioned that grand harvest was July to September. For that matter salt importers were obliged to absorb local salt so that price of local salt remained to be maintained. “Importers are not allowed to import salt within a period of one month before grand harvest, i.e. from July to December” Di Director General of KPK3 Sudirman Saad remarked. Sudirman also added on, to ensure salt trading system, it was advisable for the Government to set up the salt buffer boards, “The salt buffer board was rated to be able to protect embankment operators and stabilize price of salt.”

PT Garam was expected to be able to make use of 5,700 ha land so the company was expected to jack up production output of salt up to 120 tons. Ha/year. And yet he said there were a number of private salt producers who adopted dimpled PUGAR with simple technology which was able to produce 72 tons/ha. For that matter KKP had exercised the PUGAR KKP program to increase salt production to the maximum. Previously since 2011 KKP had exercised PUGAR program with budgetary support of Rp90 billion. “The aim of PUGAR program is to support national salt self supporting program.”

BUSINESS NEWS - September 26, 2012

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