Indonesia to cut wheat flour import tariff, roll out quotas: official

JAKARTA (Reuters) - Indonesia will slash its 20 per cent import tariff on wheat flour next month and opt instead for a quota system, an official of the trade ministry in Asia's second-largest wheat importer said.

Indonesia, which is forecast to buy 6.5 million to 6.7 million tonnes of wheat this year, introduced an emergency import tariff of 20 per cent on Dec 5, 2012 in a bid to protect its expanding wheat mill industry from subsidised imports.

The wheat flour import tariff will revert back to 5 per cent on May 4, and a total import quota of 441,141 tonnes will be allocated among countries such as Turkey, Sri Lanka and Ukraine, said Bachrul Chairi, director general of foreign trade at the trade ministry.

The new quota will be for the period until December, added Chairi, who gave no reason for the change in wheat flour policy or details on what would happen after December.

Indonesia imports all its wheat, both unprocessed grains and flour, which is largely used to make noodles, bread, cakes, biscuits and convenience snacks.

Turkey is traditionally the largest exporter of wheat flour to Indonesia, accounting for about 60 percent of the country's total imports of 175,000 tonnes last year, which fell from about 400,000 tonnes in 2012 due to the tariff.

Although temporary tariffs are allowed under World Trade Organisation rules if an unexpected flood of imports threatens to seriously damage a domestic industry, officials in Turkey had said they could bring a case against Indonesia.

Australia supplies around 65 percent of Indonesia's imports of wheat, with Canada and the United States largely making up the rest.

Join ST's Telegram channel and get the latest breaking news delivered to you.