Olefin maker asks for 40% in tariff protection<\/p>\n
JAKARTA (JP): PT Chandra Asri Petrochemical Center, the
\ncompany constructing the country's first olefin project, said
\nyesterday that it needs government protection in the form of a
\n40-percent duty on similar imported products.<\/p>\n
\"The imposition of an import duty of 35 percent to 40 percent
\nfor seven to eight years will be fine. The rate can then be
\ngradually reduced by four percentage points per year,\" a company
\ndirector, Peter Gontha, told Commission VI of the House of
\nRepresentatives in a hearing here yesterday.<\/p>\n
However, he said that any decision concerning protectionist
\nmeasures will be up to the government.<\/p>\n
Chandra Asri is expected to start operating its factory in
\nCilegon, West Java. Once operational, they will manufacture
\nolefin products, including ethylene and propylene, the
\nintermediate petrochemicals used to make polyethylene and
\npolypropylene, which can be used to make plastics, tires,
\nsynthetic fiber, pesticides, synthetic rubber, house wares and
\ndetergent.<\/p>\n
Peter said his company operates in a strategic industry,
\napplying efficient technology. Its production will also create
\njobs for some 800,000 people in the downstream industries.<\/p>\n
\"The project will support the development of downstream
\nindustries in the country,\" he said.<\/p>\n
Affect<\/p>\n
He argued that the imposition of higher tariffs on olefin
\nproducts will affect the prices of downstream products but said
\nthat the \"impact will be little.\"<\/p>\n
If the tariff is set at 30 percent, consumers will have to
\nbear an additional cost of 0.1 percent for sugar which is
\npackaged with plastic film, he said.<\/p>\n
The price of plastic bottles for shampoo and similar products
\nwill be 0.8 percent higher if the tariff is set at 50 percent, he
\nsaid.<\/p>\n
State Minister of Investment Sanyoto Sastrowardoyo said
\nrecently that the government would provide tariff protection for
\nChandra Asri, which has made a huge commitment to manufacture
\nstrategic products with the employment of thousands of people.<\/p>\n
The government currently imposes a 20 percent import duty and
\n20 percent surcharge to protect local polyethylene and
\npolypropylene products, while ethylene and propylene are free
\nfrom duties.<\/p>\n
According to Peter, as a beginner in the petrochemical
\nindustry, Chandra Asri will face stiff competition with
\nestablished overseas players which are able to launch dumping
\nproducts.<\/p>\n
\"We need the protection and I'm relieved that I can discuss
\nthe matter with legislators directly. I always wish to do so with
\nthe government,\" he said, adding that his company has faced
\nstrong offenses since the construction began in 1991.<\/p>\n
The US$1.7 billion plant in Cilegon, West Java, is expected to
\nstart operation and production next year. The project was
\noriginally begun by three national business groups -- Barito
\nPacific, Napan and Bimantara -- in 1989 but its construction was
\ntemporarily suspended in 1991 when the government announced its
\nplan to control the inflow of offshore commercial loans. In 1992,
\nMarubeni Corp. of Japan and two Hong Kong-based multi-national
\ncompanies took over Chandra Asri and turned it into a wholly
\nforeign investment project to allow more overseas financing.<\/p>\n
Chandra Asri, as a foreign project, is not subject to the
\ngovernment's ruling on the ceiling for overseas borrowing.<\/p>\n
The Far East Economic Review, a Hong Kong-based economic
\nmagazine, reported early last year that the ownership of the Hong
\nKong firm was divided among Barito's chairman Prajogo Pangestu,
\nBimantara's chairman Bambang Trihatmodjo and Napan's chairman
\nHenry Pribadi, while the Japanese share-holding was funneled
\nthrough another holding company, Japan Indonesia Petrochemical
\nInvestment Corp. The magazine also reported that the company
\nwould remain Indonesian-controlled as Projogo, Henry and Bambang
\nwould share a 75 percent stake, while Marubeni and Japanese
\nchemical maker Showa Denko were to own 25 percent.<\/p>\n
Prajogo, Henry and Bimantara's executive Peter F. Gontha are
\nstill the president and directors of the company, while Bambang,
\nwho is one of President Soeharto's sons, remains the chief
\ncommissioner of the company.(icn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/olefin-maker-asks-for-40-in-tariff-protection-1447893297",
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