Jakarta, Sept 3 - Indonesia's anti-trust agency, KPPU, said on Thursday the government must allow the sale of refined sugar to consumers, instead of just to food and beverage firms, to ease prices after a recent spike to record highs.
"This is just a shock therapy to bring down prices in the near term," Riris Munadyah, a policy analyst at KPPU, told Reuters.
In the longer run, the agency recommended that the government build its own white sugar stocks so it could put a cap on retail prices.
The sugar industry is tightly controlled in Indonesia. Refined sugar, which is produced using imported raw sugar, can only be sold to food and beverage firms.
White sugar from local sugar cane, which is of a lower quality than from refined sugar, can only be sold to consumers and small-scale food and beverage producers.
The retail price of white sugar has surged to above 11,000 rupiah per kg in recent weeks, tracking global prices, despite the fact that domestic production exceeds consumption.
"There is a strong suspicion that the recent price rally was engineered by the distribution network, who are the long-time industry players," KPPU said in a statement.
Munadyah said the change in policy is expected to encourage distributors to release their white sugar stocks on fears that fresh supply may flood the market.
The government is currently studying various options to contain the rally in sugar prices, which tracks the rally in global prices.
Among the options, the government is planning to issue additional quota for raw sugar imports this year on top of the initial quota of 1.67 million tonnes, the trade minister said on Wednesday.
The government is also considering cutting import duties on both raw and white sugar.