Protection for aromatics firm criticized<\/p>\n
CILEGON, West Java (JP): A business leader expressed his worry
\nyesterday about the possibility of the government setting up a
\nnew tariff structure to protect a politically well-connected
\naromatics firm.<\/p>\n
Aburizal Bakrie, chairman of the Indonesian Chamber of
\nCommerce and Industry, called on the government to harmonize the
\nmessy tariff structure on imported olefin and its derivatives and
\nto not impose new protection measures on aromatics and aromatic
\nderivatives.<\/p>\n
\"If the government extends tariff protection to upstream
\nindustrial products how can industries working at the midstream
\nand downstream levels compete in the global market,\" Aburizal
\nasked, after the inauguration of three petrochemical plants
\naffiliated with the Bakrie Group.<\/p>\n
The three new plants are a purified terephthalic acid (PTA)
\nplant owned by PT Bakrie Kasei Corporation, a polyethylene
\nterepthathalate (PET) resin plant owned by PT Bakrie Kasei-PET
\nand a PET-film plant owned by PT Bakrie Diafoil.<\/p>\n
Both PET-resin and PET-film are derivatives of PTA, while the
\nproduction of PTA needs paraxylene, an aromatic product, as a raw
\nmaterial.<\/p>\n
Currently, the import tariff on both paraxylene and PTA is set
\nat zero percent. However, there is growing concern that the
\ngovernment might erect new tariff protection for paraxylene when
\nan aromatic plant controlled by the politically well-connected
\nHumpuss Group starts producing paraxylene.<\/p>\n
Such concerns are not groundless, especially since the
\ngovernment broke its own promise by protecting olefin products.<\/p>\n
Last February, the government established a temporary 20
\npercent duty surcharge on imports of ethylene and propylene on
\ntop of a 5 percent import tariff. Then, last month, the
\ngovernment turned the temporary measure into a permanent one by
\nincorporating the surcharge into the tariff structure.<\/p>\n
Both ethylene and propylene are produced by PT Chandra Asri
\nPetrochemical Center, which is believed to have strong political
\nclout.<\/p>\n
Minister of Industry and Trade Tunky Ariwibowo said yesterday
\nthat he would do his best to improve the chemical industry's
\nmessy tariff structure.<\/p>\n
\"I will harmonize the tariff structure in due time. It is my
\nhomework, and I continue to keep this in mind,\" Tunky said at the
\ninauguration.<\/p>\n
However, Tunky did not state that the government would not
\nprotect Humpuss's aromatic plant in Arun, Aceh. The plant, with
\nan annual production capacity of 370,000 tons of paraxylene and
\n160,000 tons of benzene, plans to start commercial production in
\n1998.<\/p>\n
Aburizal, who is also chairman of the Bakrie Group, noted that
\nBakrie plans to build the country's third PTA plant with the same
\nproduction capacity in 1998, even though the current PTA market
\nis not favorable.<\/p>\n
\"While PTA is not protected, we are worried that the
\ngovernment may protect raw materials for PTA,\" Aburizal said,
\nadding that Bakrie Kasei plans to increase its annual capacity to
\none million tons of PTA in 1998.<\/p>\n
With its new PTA plant, Bakrie Kasei's annual capacity
\ncurrently stands at 600,000 tons of PTA per annum.<\/p>\n
Bakrie Kasei is 51 percent owned by Mitsubishi Chemical
\nCorporation of Japan, 20 percent by PT Bakrie & Brothers, 19
\npercent by Japan Asia Investment Co. Ltd. and 10 percent by the
\nInternational Finance Corporation.<\/p>\n
Director General of Steel, Machinery, Electronic and Chemical
\nIndustries Effendi Sudarsono, also present yesterday, said the
\ngovernment would maintain the existing tariff structure for
\naromatic products.<\/p>\n
\"The government tries to be consistent in maintaining such
\nharmonized import tariffs,\" he said. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/protection-for-aromatics-firm-criticized-1447893297",
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