ICC Suggests a Change to Salt Trade System.

ICC has suggested that the Government make a change to the industrial salt import trade system for short-term in order to prevent the abuse of market power from occurring by salt importers; and make a more precise accuracy of the salt balance so that domestic salt absorption can further be optimized. Such suggestion was conveyed by the Chairman of the ICC to the Coordinating Minister for the Economy and the Coordinating Minister for Maritime Affairs on October 28, 2019.

The purpose of the said statement was to respond to information in various media regarding the planned importation of industrial salts of 2.92 million tons. This has become a center of attention because the quality of local salts is deemed by industrialists as not yet in line with the specifications of the industrial needs, namely salts with a Sodium Chloride (NaCl) content of above 97%.

ICC itself had assessed the policy on industrial salts in 2010 in order to follow up the Decision of the ICC on Case Number 09/KPPUI/2018 regarding Alleged Violation of Article 11 of Law Number 5 Year 1999 in the Trade of Industrial Salts for Various Foods in Indonesia, and identified that the policy on industrial salts had very much distorted the working of a fair business competition in this industry.

ICC has delved deeply into the characteristics of industrial salts and the underlying policy in the said assessment. One of the big problems facing the industrial salts at the moment is the abundance of products in 2019, but only a part was absorbed by the market. User industries deem the salts of farmers as not meeting the set standards. This condition has become an irony because imports in a huge amount are conducted in the midst of abundant supply of salts of farmers. To date, it seems that there is almost no solution for problem solving efforts so that the salts of farmers can meet market needs and become the substitution for the imported salts. The news on the increased amount of imports of 6% in 2020 describes the said condition.

This condition keeps on putting pressure on farmer salts. The price of farmer salts goes down to IDR150/kg. One of the classic problems arising is that the condition of abundant imported industrial salts also penetrates edible salts in the midst of the magnitude of farmer salts not absorbed by the market. The low price of farmer salts which is merely worth IDR150/kg has further become an irony because the retail price of edible salts at the retailers is above IDR10,000/kg.

In responding to the said problem, ICC has given suggestions and considerations to the Government with regard to the salt industry improvement efforts as follows:

1. Industrial salt penetration prevention can be conducted through the industrial salt importation control, through the submitting of needs by the salt user industries not by the importers. After that, the imported salts may only be distributed to such user industries not to other consumers.
2. With regard to the condition of not yet optimum absorption of farmer salts by the market, it is necessary to endeavor the granting of priority to farmer salts in fulfilling the market and improving the competitiveness thereof. This can be conducted by way of the following:

• In short-term, it is necessary to improve the accuracy of the data of the national salt balance; the Accuracy is needed to ensure that the needs for certain industrial salts can be fulfilled by farmer salts in an optimum manner. The process of decreased imports up to 975,228 tons in 2019 shows that a lot of industries the fulfillment of which could be optimized through farmer salts.
• In medium-term, the Government has to continually develop programs for the development of quality and competitiveness of farmer salts. In addition to the above, for the purpose of helping the farmers, it is necessary to develop a salt warehouse receipt system. Another thing that needs to be developed is the granting of incentives to the salt processing industries capable of generating industrial salts from the raw materials of the farmer salts;
• In long-term, the development of industry can be directed to the efforts for the creation of various salt processing models/technologies and extensification of salt ponds in the sites that geographically can become appropriate areas to generate salts in an optimum and competitive fashion.

1. For the purpose of the improvement of the industrial salt import trade system, this can be done through (i) the expansion of the exception of the types of industry that can conduct direct imports (not limited to chlor alkali, pharmaceutical, and cosmetic industries); and (ii) the implementation of the competition for the market mechanism, such as bidding, tender, beauty contest, or other forms of selection for the purpose of determining the importers that will import industrial salts. Such importers must be capable of giving the cheapest price for user industries, possessing the supply availability warranty and fulfillment time, as well as realizing their entire import obligations (100%).
2. For the purpose of resolving the problem of low purchasing price of farmer salts and high price of the edible salts at the retailer level, this can be done by way of including salts as part of the basic and important necessities as provided for by the Government. Therefore, the reference price of salts at farmer (purchase) level and the highest retail price at consumer level can be fixed.

Thus, ICC has conveyed its position and suggestions for the improvement of the said national salt industry. To date, ICC has yet to receive official responses to the suggestions and considerations conveyed.