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Indonesia's flour mills say hit by wheat dumping

JAKARTA: Indonesia's flour mills accused the European Union, Australia and the United Arab Emirates on Friday of dumping their wheat in the country, threatening the local industry.

"Dumping is proven (to have taken place)...based on preliminary data," Franciscus Welirang, director of PT Indofood Sukses Makmur Bogasari Flour Mills, told a news conference.

"We are facing dumping practices by Australia, the European Union and the United Arab Emirates," he added. Bogasari is a unit of the country's largest noodle maker, PT Indofood Sukses Makmur INDF.JK.

Welirang said the alleged dumping posed no threat to Bogasari, but threatened the country's three smaller firms: PT Sriboga Ratu Raya Flour Mills in Semarang, Central Java, PT Panganmas Inti Persada Flour Mills in Cilacap, Central Java, and PT Berdikari Sari Utama Flour Mills in Makassar, South Sulawesi. Executives of the mills were also present at the news conference.

Welirang said the country's mills had reported the case to Indonesia's Anti Dumping Committee (KADI), which had decided to probe the alleged dumping.

Indonesia allowed private traders to import wheat for the first time in decades in 1998 in line with an agreement with the International Monetary Fund (IMF).

Before the trade was liberalised, the state commodity regulator would import wheat and ask Bogasari to mill it for a fee.

Welirang said the country's mills had a total capacity of 4.7 million tonnes in 1999, but the market then only absorbed 2.7 million tonnes. Consumption was expected to rise to around 3.0 million tonnes this year, which means that oversupply persists.

He said imports were recorded at 3,415 tonnes in October 1998, but then soared to 36,859 tonnes in the same month in 1999, suggesting that dumping had taken place.

Welirang said dumping might cause prices of wheatflour to fall in the local market, which, in a short term, would be good for consumers.

But in the long run, local flour mills would lose their market and stop operations. This, said Welirang, would make Indonesia, which does not grow wheat, totally dependent on wheatflour imports. He gave no further details.-Reuters