Economists question propylene protection<\/p>\n
JAKARTA (JP): Economists have questioned the government's
\npolicy, announced on Wednesday, of increasing the protection of
\npropylene producers at a time when it is trying hard to improve
\nthe performance of the country's exports.<\/p>\n
Didik J. Rachbini, chairman of the Institute for the
\nDevelopment of Economics and Finance, called it another example
\nof the government's inconsistency in economic policies.<\/p>\n
"This policy is irrational and demonstrates inconsistencies on
\nthe part of the government. And such an irrational policy can
\nonly disturb the on-going process targeting better business
\npractices," Didik told The Jakarta Post yesterday.<\/p>\n
The government promised last September that it would not
\nprotect PT Chandra Asri Petrochemical Center, a propylene
\nproducer. However, it has protected it by introducing a 20
\npercent surcharge on propylene imports, on top of the existing 5
\npercent duty.<\/p>\n
Surcharge<\/p>\n
The surcharge is applicable on shipments after Feb. 2 and is
\neffective until June 30. The government has hinted that it may
\nextend the surcharge after June 30.<\/p>\n
Christianto Wibisono, chairman of the Indonesian Business Data
\nCenter, said the policy indicates the government's confusion on
\nwhat measures to take to strengthen the country's industrial
\nstructure.<\/p>\n
The government currently wants to develop the upstream
\nindustry, which is relatively behind other countries. However,
\nwhen it decides on protection for the upstream industry, it
\ndirectly affects the competitiveness of companies in the
\ndownstream level.<\/p>\n
"If the competitiveness of companies in the downstream level
\nis affected, it will endanger the performance of our exports. So,
\nwhat does the government want? Protecting the upstream industry
\nor improving exports," Christianto said.<\/p>\n
He suggested that the government give a definite time frame
\nfor how long the protection extended to the industry is
\nconsidered necessary.<\/p>\n
Concurring with Christianto's view, Didik said protection with
\na transparent time frame would be acceptable. However, he
\nquestioned if protection can really be used to improve the
\ncountry's industrial structure.<\/p>\n
"What we can see so far is that many of those asking for the
\ngovernment's protection are just rent-seekers. Therefore, the
\npeople don't like protection because they have to make sacrifices
\nwithout getting any rewards," Didik said.<\/p>\n
Erie Soekardja, chairman of the House of Representatives'
\nmanufacturing, mining and energy commission, explained that
\nintroducing protection measures to strengthen any industry is
\nlegitimate under existing industrial law.<\/p>\n
Development<\/p>\n
He said he could understand the government's move to protect
\nthe propylene manufacturers as the country needs to strengthen
\nits upstream industry to support the development of the
\ndownstream industry.<\/p>\n
"Before introducing the surcharge, the government must have
\nconsidered all the factors. Of course, we (the commission) will
\nask for clarification on the matter in our next hearing session
\nwith the government," Erie told the Post.<\/p>\n
When disclosing the surcharge, Minister of Trade and Industry
\nTunky Ariwibowo contended that it would not affect the production
\ncosts of companies in the downstream level because the protection
\non polypropylene remains unchanged.<\/p>\n
Propylene is the raw material for the production of
\npolypropylene which is used in the production of plastics.
\nCurrently imports of polypropylene are subject to a 20 percent
\nimport tariff and another 20 percent surcharge.<\/p>\n
Didik, however, questioned Tunky's statement, saying that the
\nadditional surcharge on propylene will eventually affect
\ncompanies in the intermediary and downstream levels.<\/p>\n
"There is bound to be an impact. However, I don't know how
\nmuch the impact will be. It will need special research to measure
\nit," Didik said. (rid)<\/p>\n
Editorial -- Page 4<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/economists-question-propylene-protection-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }