Government to cut petrochemical tariffs<\/p>\n
JAKARTA (JP): The government plans to cut import tariffs on
\nseveral chemical and petrochemical products by Nov. 10 to boost
\nthe local downstream chemical industry, Minister of Trade and
\nIndustry Rahardi Ramelan said yesterday.<\/p>\n
The tariff cut would target the current high import duties on
\ncertain petrochemical products designed to protect the country's
\nupstream petrochemical industry, he told a seminar on the
\nchemical industry.<\/p>\n
\"The government will decide on the tariff harmonization before
\nthe special session of the People's Consultative Assembly.\" The
\nsession is also scheduled for Nov. 10.<\/p>\n
Rahardi admitted there were inconsistencies in the current
\nimport tariffs for petrochemical products.<\/p>\n
Tariffs on several upstream and midstream products were higher
\nthan products for the downstream industries, he said.<\/p>\n
He identified the products as ethylene, propylene, styrenes,
\npolyethylene, polypropylene, polystyrene and polyvinyl chloride.<\/p>\n
Import duties on those petrochemical products are currently at
\nup to 35 percent.<\/p>\n
\"This isn't healthy, especially because the tariffs were set
\nwhen our currency exchange rate was around Rp 2,300 against the
\ndollar,\" he said.<\/p>\n
The rupiah has dropped in value by 80 percent against the U.S.
\ndollar since July last year.<\/p>\n
Rahardi said the high cost for upstream products had pushed up
\nprices of prepackaged consumer goods.<\/p>\n
At yesterday's seminar, economist Faisal Basri urged the
\ngovernment to abandon import tariffs altogether because they were
\nno longer relevant to the crisis-hit economy.<\/p>\n
\"The rupiah's collapse automatically means import tariffs rose
\nby over 100 percent,\" he said.<\/p>\n
Tariffs only gave protection to certain companies, such as PT
\nChandra Asri Petrochemical Center, he said.<\/p>\n
Chandra Asri, which produces ethylene, propylene and
\npolyethylene, is partly and indirectly owned by former president
\nSoeharto's son Bambang Trihatmodjo.<\/p>\n
Currently, smaller companies must buy from the local upstream
\nindustries at a very high cost, Faisal said.<\/p>\n
Prices should be given to the market forces, and the
\ngovernment must instead provide subsidies on facilities, which
\nhave social benefits, such as the seaport of plant facilities, he
\nsaid.<\/p>\n
Peter F. Gontha, the newly appointed president of Chandra
\nAsri, said the consequence of eliminating protection for Chandra
\nAsri and other petrochemical companies would be the relinquishing
\nof development of the petrochemical industry in the country.<\/p>\n
\"If they want to lift them now, it's ok, but that means
\neveryone must carry the consequences.\"<\/p>\n
Responding to Faisal's charge that Chandra Asri was involved
\nin graft practices, Peter said the petrochemical industry had
\nbeen much too politicized by the public.<\/p>\n
\"I am a crony capitalist, because I have been working with
\nBambang for 12 years,\" he said. He added that he had nothing to
\ndo with nepotism and corruption.<\/p>\n
He said Chandra Asri would be better off to halt all
\nproduction now, except for that of polyethylene, because the
\nprice of ethylene was no longer sufficient to cover purchase of
\nits raw material naptha.<\/p>\n
If the company shut down, local downstream petrochemical
\ncompanies which bought products from Chandra Asri would lose
\ntheir supplies, he added.<\/p>\n
Also speaking at the seminar was Habil Marati, the president
\nof chemical firm PT Batavindo Kridanusa, Samto Utomo, a director
\nof the state-owned oil and gas firm PT Pertamina, and Benny
\nSoetrisno, head of the Indonesian Textile Association. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-to-cut-petrochemical-tariffs-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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