When government offices work to their own agendas, the business sector is always the victim.

Different policies adopted by government offices on the use of primary products have, for example, resulted in a shortage of raw materials for many of the country's downstream industries.

Industry Minister Fahmi Idris admitted Thursday that policies issued by his ministry and those by the Agriculture Ministry regarding primary products were contradictory.

"The Agriculture Ministry and the Industry Ministry still have different perspectives on what policies should be adopted to develop the real sector. This has resulted in contradictory tax policies," Fahmi said on the sidelines of a meeting Friday with the Indonesian Chamber of Commerce (Kadin).

Fahmi said that while his office put emphasis on the use of primary products as raw materials for the local manufacturing industry, the Agriculture Ministry put a priority on exports.

As a result, fiscal policies regarding primary products are also contradictory. The tariffs charged on primary product exports are generally lower than the value added tax imposed on their domestic sales. This contradictory fiscal policy has resulted in shortages of raw materials for processing industries.

Local cocoa manufacturers have been victims of these contradictory and inconsistent strategies.

"We are always in short supply, receiving only 120,000 tons annually of the total need of 300,000 tons," said Cocoa Producer Association operational director Peter Andow.

Peter explained that producers of raw materials would rather export the commodity because the valued added tax imposed on the sale of the commodity in the domestic market would give them lower earnings.

As a result, only half of 16 local cocoa manufacturers have been able to survive. The others have been forced to close down due to a lack of raw materials.

If the government removed the value added tax, the country's foreign exchange earnings from processed cocoa exports would be much higher than those from those of unprocessed cocoa, Peter said.

"Raw cocoa is sold at US$1,100 per ton, while prices of processed products can reach $4,500 per ton," he said.

Similar complaints have come from the petrochemical industry. Manufacturers of petrochemical products say the government's previous policy of prioritizing liquefied natural gas caused a shortage of gas for their production activities.

Indonesian Plastic Producers Association chairman Didik Suwondo said that if emphasis was given to sales of natural gas in the domestic market, the financial gains would be higher.

Didik explained that the price of gas-based ethylene products would be 30 percent cheaper than products made from light naphtha.

"If we can develop more gas-based ethylene crackers, the downstream industries will be more competitive," he said.

Ethylene is a chemical feedstock for plastic and synthetic fiber.

The government has since revised its gas policy and put more emphasis on the use of gas for the domestic market, but the policy has yet to affect the domestic supply.

Currently, as a result of the shortage of both naphtha and gas, local plastic manufacturers have to rely on Indonesia's sole ethylene producer's annual supply of 520,000 tons, while actual demand for the product amounts to 1.3 million tons.

Consequently, local downstream companies import more than half of their raw materials at prices that are roughly 25 percent higher.

Petrochemical producers forecast domestic demand for their products will grow by at least 10 percent annually.

Separately, participants at the Kadin meeting once again put forward their complaints over the planned electricity rate hike.

While the industry minister insisted that business-to-business negotiations on power rates was the most logical way to get a win-win solution, industries argued that this would not be effective.