Protection for upstream industry kept to minimum<\/p>\n
PANDEGLANG, West Java (JP): Tariff protection for upstream
\nindustrial products will be limited to a maximum of five percent
\nto avoid heavy burdens on consumers, a senior official says.<\/p>\n
\"The government would actually prefer to help improve the
\ncompetitiveness of domestic industries against imports by
\nintroducing incentives rather than imposing import duties which
\nwould burden downstream industries and consumers,\" Director
\nGeneral of Chemical Industries Sujata said at the opening of a
\nfour-day seminar on Wednesday night.<\/p>\n
The seminar, organized by PT Chandra Asri, a company currently
\nconstructing a giant olefin center in West Java, discusses the
\ndevelopment of the country's petrochemical industry.<\/p>\n
Sujata said the government, which supports the implementation
\nof the new principles of the General Agreement on Tariffs and
\nTrade (GATT), is committed to imposing import tariffs of no more
\nthan five percent on upstream industrial products and a maximum
\ntariff of 30 percent on downstream industrial products in
\nprotecting domestic industries.<\/p>\n
Tariffs on other products will range between five percent and
\n30 percent, he said.<\/p>\n
However, because imposition of duties will increase production
\ncosts which in turn will affect the interest of consumers, the
\ngovernment would rather introduce incentives in the form of tax
\nexemption and other facilities, he said.<\/p>\n
The government has been under fire since State Minister of
\nInvestment Sanyoto Sastrowardoyo said recently that the
\ngovernment would likely protect Chandra Asri against imports
\nbecause the establishment of its olefin plant costs a lot of
\nmoney and its operation can help the country reduce spending for
\nimports of olefins.<\/p>\n
Sujata said the government, for example, is considering
\nreintroducing tax respites -- exemption of tax payments for the
\nfirst few years of operation -- for certain industries in a bid
\nto attract more private investments and to improve the
\ncompetitiveness of the country's products.<\/p>\n
According to Tax Director General Fuad Bawazier, the tax bills
\ncurrently being deliberated by the House of Representatives (DPR)
\nwill, if enacted, allow the reintroduction of tax respites. The
\nrevival of such a tax facility is regarded necessary because many
\ncountries in the region also offer such a facility.<\/p>\n
Efficiency<\/p>\n
Sujata said the government, before effecting protectionism for
\nany particular industrial company, will ask a company to show its
\nfinancial structure and the efficiency of its operation.<\/p>\n
\"When the financial structure of a company is weak, a
\nprotectionist measure will only result in inefficiency.\"<\/p>\n
If the main cause of uncompetitiveness of a company's products
\nis the weak structure of its finance, for example, the company
\nwill be required to improve that structure before asking
\nprotection from the government, he said.<\/p>\n
When asked about the possible protection for Chandra Asri,
\nSujata said: \"Up to now, I haven't been informed at all about its
\nfinancial structure nor about its production costs.\"<\/p>\n
Chandra Asri is scheduled to start commercial production in
\nJune next year with an initial annual production capacity of 1.3
\nmillion tons of olefin products.<\/p>\n
Sujata, however, revealed that even if the government extends
\nprotection to Chandra Asri, it cannot impose tariffs on imports
\nof olefin products because it has been committed to not increase
\ntheir tariffs from the current levels.<\/p>\n
\"If the protection were given in the form of tariffs, it will
\nonly burden downstream industries, which will in turn diminish
\nthe competitiveness of their products on the world market,\" he
\nexplained.<\/p>\n
Chandra Asri's vice president, Peter F. Gontha, who was
\npresent at the seminar along with the company's president Prajogo
\nPangestu, said that if the government gives his company a tax
\nrespite for a certain period of time it will be enough.<\/p>\n
\"If we are freed from paying income tax for a certain period
\nof time, for instance, we will be able to cut production costs by
\n20 percent,\" Gontha said.(rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/protection-for-upstream-industry-kept-to-minimum-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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