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Indonesia may soften sugar import rules to avoid shortages

[JAKARTA] Indonesia may relax its raw sugar import regulations to set quotas every six months rather than quarterly, the industry minister said, as it tries to avoid supply shortages that led to refinery closures last year.

Many sugar refineries in Indonesia, one of the world's biggest buyers, were forced to close late last year after the government slashed imports in line with its aggressive food self-sufficiency policies.

Indonesia is already considering softening its policies on cattle and rice imports as President Joko Widodo looks to tackle sluggish economic growth, a weak rupiah and fluctuating food prices. "One of my concerns as industry minister is that production in food and beverage industries is not stopped because of lack of material," Saleh Husin told Reuters in an interview late on Wednesday. "For next year, we will probably no longer use the quarterly scheme - we'll extend it so that there will be certainty of supply for food and beverages industry." Indonesia is forecast by the government to import 3.2 million tonnes of raws this year, and ranked behind China and the United States in sugar imports in 2015/16, according to US government data.

The country's sugar industry is split in two and is tightly regulated. Households, retail and small-to-medium firms rely on domestic white sugar supplied by a network of older mills, while modern refineries import raws for large-scale food and beverage industries, mostly from Brazil, Thailand and Australia.

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Sugarcane farmers and millers often lobby the Indonesian government not to issue raw sugar imports because they say the refined sugar can often find its way to domestic consumers.

Changes to raw sugar imports rules were being discussed by officials within the industry, trade ministries and the investment coordinating board, said Husin.

Sugar refinery owners in Indonesia include Olam International and Wilmar International.

Indonesia's government is also mulling whether to make its live cattle quotas annual, from quarterly, while senior government officials are openly discussing the possibilities of rice imports after ruling out overseas buying of the staple grain earlier this year.