Agrobusiness bodies spurn planned govt export tax
JAKARTA (JP): Industry associations strongly objected on Tuesday to a government plan to impose export taxes on primary agricultural products.
They said the government should look for more suitable alternatives in developing downstream industries.
Secretary-General of the Indonesian Cocoa Association (Askindo) Tony K. Indranada said the government should provide incentives to improve the quality of agricultural produce and its downstream industry instead of imposing export taxes.
"For example, if the government wants to encourage farmers to export fermented cocoa, and not the lower value unfermented cocoa beans, the government should provide incentives to improve cocoa quality, not by imposing export tax on unfermented cocoa beans," he said on Tuesday.
"Imposing export tax on primary products which have great potential to export should be the government's last alternative."
Askindo's vice chairman Munargi said selling fermented cocoa would be harder than selling unfermented cocoa.
"The United States, our biggest cocoa buyer, prefers bitter chocolate, which is processed from unfermented cocoa. In Europe, our fermented cocoa can not compete with cocoa produced by the Ivory Coast, due to the difference in fat content," he said.
Munargi said the local chocolate industry could not absorb cocoa produced by farmers, because the cocoa content in their chocolate products' composition was only five percent.
The rest of the product was composed of sugar and milk, he said.
Tony said the government should develop the local chocolate industry by ensuring a sufficient supply of sugar and milk.
The Ministry of Industry and Trade announced last week it would go ahead with its plan to impose export taxes of between 20 percent and 30 percent on unpeeled cashew nuts, untreated leather and unfermented cocoa beans.
The ministry said the measure would encourage development of the processing industries for the commodities and boost the latter's exports.
The ministry said it was still studying the possibility of imposing the tax on other primary products.
Similar protests were made by the Association of Indonesian Cashews Industry (AIMI), the Association of Indonesian Coffee Exporters (AICE) and the Indonesian Tea Association (ATI). All claimed the export tax would lower the competitiveness of Indonesian commodities on the international market.
AIMI's chairman, Tony Simanungkalit, said the government should allow farmers to benefit from higher export prices.
He said the current shortage of raw materials among local cashew processors was caused by poor inventory management adopted by the processors.
AICE's chairman, Oesman Soedargo, said exporting processed coffee would be harder than exporting coffee beans, because the products should follow buyers' tastes.
"It will be difficult for local coffee processing industries to follow buyer's various tastes," he said.
Kaman Nainggolan, the head of the market information agency at the ministry of agriculture, said the government, instead of imposing export tax, should lower import duties for components used in agroindustry, such as tin plate and farming machinery.
"The government should also reduce high costs in agroindustry, which discourage investors from developing businesses," he said.
However, Director of agroindustry at the Ministry of Industry and Trade Yamin Rachman defended the plan, saying that exporting processed products would not only generate more foreign exchange, but could also create new job opportunities. (gis)