CHANGES EFFECT OF SUGAR IMPORT TARIFF IN INDONESIA

The purpose of this paper is to study the effect of sugar import tariffs changes since the tariff import is the only policy to increase the sugar domestic production. This analysis is performed using a CGE (computable general equilibrium) model of Indonesian economy in 2008. Results showed that the increases of sugar import tariff have some different conclusions. If sugar tariff import will rise to 41.6% and to 50%, the domestic output of sugar will increase about 1.89% and 3.77%; and household welfare would increase about 0.52 and 0.76%, respectively. But when the sugar import tariff is removed, domestic output of sugar and sugarcane have not changed, but the agricultural sector would reduce and income of all agents would decrease. Thus, the relevant tariff depends on the purpose of the government whether to increase domestic output and import or export of certain sectors, and the welfare of producers or consumers.