Plastic firms ask for lower tariff<\/p>\n
Benget Simbolon Tnb., The Jakarta Post, Singapore<\/p>\n
The government should quickly cut import tariffs on plastic
\nproducts to below five percent in compliance with the ASEAN Free
\nTrade Area (AFTA) and stop protecting the sector for too long,
\nplastics industry businessmen said on Thursday.<\/p>\n
President director of publicly listed PT Dynaplast Tony T.
\nHambali said that if the government continued protecting the
\nlocal product then the industry would not mature and would be
\nunable to compete with other countries' products.<\/p>\n
\"I'm afraid we'll never learn the lesson to compete freely
\nwith the others if the government continues to protect local
\nproducts. It should liberalize them soon, as has been done by
\nSingapore,\" he told The Jakarta Post here on Thursday.<\/p>\n
Under the AFTA scheme, Indonesia and several other member
\ncountries of the Association of Southeast Asian Nations (ASEAN)
\ncut most of their import tariffs to below 5 percent this year.
\nBut Indonesia is allowed to maintain tariffs on plastic products
\nabove five percent until 2003 under a mechanism that allows each
\nASEAN member to delay the implementation of AFTA on certain
\nproducts.<\/p>\n
Tony, who was visiting the four-day Aseanplas 2002 -- a trade
\nfair for plastic and rubber in Singapore -- said that with that
\ntariff foreign plastic products should be more expensive than
\nIndonesian products. But, in fact, local producers also adjusted
\ntheir prices to those of the foreign ones.<\/p>\n
\"Local producers also adjust their prices to the foreign ones.
\nIf the foreign price is Rp 660 (6.6 U.S. cents) after a 10
\npercent import tariff, the local producers will also price their
\ngoods at Rp 660,\" he said.<\/p>\n
Bambang Purnomo, the marketing manager of PT Yanaprima
\nHastapersada, the only Indonesian company participating in the
\nAseanplas, shared Tony's views, saying that generally,
\nIndonesia's plastic products were ready to compete with other
\nforeign products.<\/p>\n
\"There is no need for the government to spoil the Indonesian
\nproducts too much. It won't help them to grow well. Just apply
\nthe AFTA requirements and they will find their way to win the
\ncompetition. Otherwise they'll never improve,\" he pointed out.<\/p>\n
He said that past experience had shown that too much
\nprotection from the government had made many local products
\nunable to develop as well as expected.<\/p>\n
But besides the tariff, there were other factors that made the
\nlocal products less competitive. These included high operational
\ncosts and interest rates.<\/p>\n
\"Here we have interest rates of up to 20 percent, while in
\nother countries they are just below 10 percent. In Thailand, for
\nexample, they are just 5 percent. In Singapore, they are even
\nlower than that,\" Tony said, adding that the government should
\naddress the other factors to help sharpen local competitiveness.<\/p>\n
Gary Fielding, the vice president of the Clariant Group, which
\nparticipated in the Aseanplas trade fair, also asked the
\nIndonesian government to liberalize plastic products.<\/p>\n
\"I'd like to see the tariffs disappear and every producer can
\nthen compete fairly in the market,\" he noted.<\/p>\n
Gary, whose company has a subsidiary in Tangerang under the
\nname PT Clariant Indonesia, said the government ought also to
\nimprove the investment climate in the country.<\/p>\n
\"The main issue facing Indonesia now is how the government can
\ncreate stable banking and consistency in tariff regulations,
\nprocedures and legal issues. What the investing community needs
\nthe most is stability and consistency. If you keep changing, then
\nit will be very difficult for investment,\" he said.<\/p>\n
According to him, apart from low costs of production thanks to
\nlow labor costs, many investors were attracted to Indonesia,
\ngiven its large market potential.<\/p>\n
\"If investors only considered production costs then they'd go
\nto China, the cheapest place. But they also take into
\nconsideration Indonesia's market potential, which is very big,\"
\nhe noted.<\/p>\n
\"If the government does not create stability they won't come,\"
\nhe said, adding, however, that political stability was improving,
\nalthough foreign media reported otherwise.<\/p>\n
He suggested that foreign investors go to Indonesia to see for
\nthemselves. By going they would find out that the actual
\nsituation was not as bad as the foreign media had reported.<\/p>\n
\"We still see it (Indonesia) as a market with large potential.
\nBut the government needs to improve things in order to attract
\nmore investment,\" he said.<\/p>\n
Indonesia's plastic consumption has steadily increased during
\nthe last three years, from 1.1 million tons in 1999 to 1.4
\nmillion tons in 2000 and 1.6 million tons last year.<\/p>",
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