Boiler association seeks tax incentives: Secretary

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)