Agrobusiness bodies spurn planned govt export tax

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)