Summit delay may cut Thai sugar exports to Indonesia

BANGKOK, - Thai sugar exports to Indonesia could fall significantly in 2009 because of the postponement of a Southeast Asian summit this month, which means a trade agreement between the two countries may not be signed for some time.

Traders could not estimate how much exports might fall, but they said they expected a sharp drop after a summit of the Association of South East Asian Nations (ASEAN) planned for December was cancelled due to political unrest in Thailand.

The Thai government has said it will now take place in March.

"I'm afraid we would lose opportunities to sell if we have to wait that long," one Thai trader said on Thursday.

The memorandum of understanding that should have been signed would oblige Indonesia to import at least 500,000 tonnes of Thai sugar per year.
SOURCE:alibaba

It is compensation for Jakarta's not putting sugar into a tariff-cutting list in an ASEAN Free Trade Area deal because it wanted to protect its domestic sugar industry.

"We should sign this MOU as quick as we can, otherwise we could lose our sugar market share in Indonesia," said a senior official at Thailand's Ministry of Commerce.

Traders said they were concerned that Indonesian buyers would shift to Brazil, which has started to increase its sales to Asia now that freight costs have fallen.

"That would be dangerous for Thailand, as Indonesia has signalled it would import less sugar because it has ample stocks, and if it wants to buy, it would buy cheaper sugar from Brazil," one trader said.

Last month Indonesian buyers bought at least 50,000 tonnes of sugar from Brazil, its first imports of the commodity from South America in 2008, as freight rates dropped.

Indonesia, hitherto an Asian sugar importer, has said it aimed to become a sugar exporter next year as its stocks were growing.

It is the biggest buyer of Thai sugar. Between January and October it bought 1.52 million tonnes, which compares with 1.3 million tonnes in the whole of 2007, according to data from Thai Sugar Millers Corporation.