Discriminative tariff

Indonesia emerged as a new player in the oleochemical industry in the late 1970s, and to date Indonesia has nine plants, two in Java with the rest located in Sumatra, with a total capacity around 630,000 mt per annum (mtpa), fatty acid (930,000 mtpa by the end of 2004) and 150,000 mtpa of fatty alcohol. The majority of fatty acid goes to overseas buyers in the form of stearic acid for toiletries, surfactants and plastic/rubber compounds.

At present China has become a major market for oleochemicals and is further growing with incoming oleochemical investors from neighboring countries, Japan, Taiwan and even Malaysia. As of Dec. 31, 2003, stearic acid was classified under HS 38.2311.000, with 16 percent import tax, no matter what the country of origin.

Under the Association of South East Asian Nations (ASEAN)- China free trade framework, both sides came to an agreement regarding ease of moving goods etc., within the region within an agreeable time frame. However, under bilateral negotiations an ASEAN country member and China may also negotiate a bilateral agreement on tariff issues so as to benefit both countries.

What happened on Jan. 1, 2004, was that the applicable tariff for stearic acid from Malaysia was lowered to 10 percent while keeping that on goods from Indonesia at 16 percent, thus creating a difference of 6 percent, which is ridiculous. Who can compete with 6 percent margin?

I do not understand and have no comment on this situation: Is there any wrongdoing on the part of our government? Why does China treat us like this?

Quo vadis our palm oil industry?

KRIS HADISOEBROTO
Indonesian Oleochemical
Manufacturers Association
Jakarta