ASARI opposes duty on recorded items

The Jakarta Post, Jakarta

Opposition is growing to the government's plan to impose excise duty on recorded products such as cassettes, LDs, CDs, VCDs and DVDs, with the Association of Indonesian Recording Artists (ASARI) being the latest to criticize the move.

"We appreciate the government's desire to improve the image of the country by curbing piracy. But, we doubt that this will be capable of being realized by slapping duties on these sort of products," a statement from ASARI said on Friday.

The plan, ASARI said, would not only be ineffective in curbing rampant piracy, despite what the government claimed, but could also reduce the earnings of people working in the industry, including artists, as it would increase prices and dampen consumer demand.

The Directorate General of Customs and Excise plans to impose excise duty on the products starting Jan. 1 next year, provided that the House of Representatives lends its approval. The directorate general argues the move will have the potential to increase state revenues by up to Rp 170 billion (US$18.08 million) based on the assumption of Rp 750 in duty per product.

Aside from that, imposing the duty -- to be accompanied by the placing of an excise sticker on each product -- would make it easier to differentiate original products from pirated ones, according to the director general of customs and excise, Eddy Abdurrachman.

"So, not only will we increase revenue, but we will also strengthen control over the circulation of pirated products -- which at present account for some 90 percent of the products on the market," Eddy said.

However, many have expressed objections to the plan, including some producers. A number of lawmakers have also raised doubts over the move, saying that even after the duty had been imposed, there were no guarantees that the abuses that had been occurring to date would diminish as flourishing piracy had always been closely associated with poor law enforcement.

ASARI, an umbrella organization representing hundreds of local entertainers, objected to the proposed duty of Rp 750 per cassette and CD, saying it was too high.

"As things stand at the moment, our entertainers are contributing between Rp 800 and Rp 2,000 in value added tax per cassette or CD, including Rp 60 per product to fund the government's piracy eradication program," said the statement.

The duty would also be much higher than the average royalties of Rp 60 per product that each singer and song writer gets, it added.

As for the industry as a whole, the move would eventually raise production costs and push up prices.

Some experts have suggested not only would the such price rises hurt customers and producers, but would also create a huge price disparity between original and pirated products -- something that could lead to even more piracy.

That in the end would be counterproductive to the government's bid to curb the problem in the first place.

At present, excise duty is imposed on cigarettes and alcoholic beverages, with this year's combined revenue target set at Rp 27.7 trillion -- around 90 percent of which comes from cigarettes.