Boiler association seeks tax incentives: Secretary

JAKARTA (JP): Local producers of boiler and pressure vessels say they need a tax incentive to enable them to compete with foreign suppliers.

The Association of Indonesian Boilers and Pressure Vessels Producers (AKUBBI) said here over the weekend their products were not competitive because their prices were often higher than imported materials.

Association secretary Didih Widjajakusumah said production costs of the locally made boiler and pressure vessels were exorbitant because of the high import duties imposed on their raw materials.

He added that buyers must also pay a 10 percent value-added tax for most of their products.

Local boilers and pressure vessels producers pay between 10 percent to 20 percent import duties. In addition, buyers pay a 10 percent value-added tax when buying the locally manufactured boilers or pressure vessels.

"We hope the government will give local producers fair treatment by reducing or eliminating the taxes so we can compete with foreign suppliers," Didih said.

Didih said more than 40 percent of the raw materials for the production of boiler and pressure vessels were imported.

Boilers and pressure vessels are used in power stations and several industries like pulp and paper, cement, fertilizer, petrochemical, and oil and gas. Both function to convert water into high pressure steam.

Most users are export-oriented companies or producers of particular products under the government's protection. These companies are mostly exempted from import duties as part of the government's policy to promote non-oil exports.

Didih said high interest rates and lack of financing support from the local banks also posed major problems in marketing their products at home.

In contrast, he said, foreign producers could easily sell their products in Indonesia because most of their transactions were backed by export credits from their banks.

"In terms of quality, local products are not worse than foreign products," he said. "We can also produce boilers and pressure vessels with international quality standards."

Didih said the association had no specific data on the local market demand for boilers and pressure vessels, but he estimated local producers occupied only 20 percent of the market.

The association's 17 members are among the 40 boilers and pressure vessels producers in the country. (jsk)