Indonesia has suspended import duties on wheat, soybeans, fertiliser and other food-related items for the rest of the year as it battles to tame inflation, an official said Friday. The government escalated its fight against rising food prices at a time when the problem is increasing pressure on the central bank to raise interest rates in Southeast Asia's biggest economy - a concern felt around the region.
The finance ministry said it decided to suspend the duties until December 31 in a bid to anticipate a shortage in supply that would hike food prices. "The policy is also to help curb inflation," said Bambang Brodjonegoro, acting head of fiscal policy at the ministry.
Extreme weather has disrupted crop production and distribution, pushing 2010 annual inflation close to seven percent, above the authorities' target of 4.0- 6.0 percent. The government scrapped import duties for rice products last year.
President Susilo Bambang Yudhoyono said Thursday at the World Economic Forum in Davos, Switzerland, that soaring food prices could lead to more unrest and food security should be a key priority for the G20. "High food prices impact on inflation but also poverty and hunger, which could lead to social and political unrest," he told the elite forum.
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