Subject: FEER: E. Timor Coffee Smuggling

Received from Joyo Indonesia News Far Eastern Economic Review Issue cover-dated December 18, 2003


Dili Urged to End Coffee Smuggling

One of East Timor's biggest coffee buyers says smuggling of the country's most important agricultural crop to Indonesia is getting worse and the government must crack down. Kenny Lay, managing director of privately-owned Timorcorp, estimates that about 40% of this year's coffee crop has been smuggled into the Indonesian territory of West Timor before being transported to the islands of Bali or Java, where it is processed and branded as Java coffee. That compares to 30% last year, says Lay, who put this year's total coffee output at about 11,000 tonnes. Alistair Laird, senior adviser to the Café Cooperative Timor, puts the figure closer to 5,000-6,000 tonnes. However both agree that the illicit cross-border trade is a big problem due largely to the cheaper cost of processing coffee in Indonesia compared to East Timor with its United States dollar-based economy. "The government should have someone on guard to stop this. Only those with factories on the ground in East Timor should be allowed to buy coffee," says Lay. His comments come at a time when the United Nations peace-keeping force responsible for protecting the porous border is preparing to withdraw from East Timor in May next year.

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