Easing of rules on used ships sought

Easing of rules on used ships sought

JAKARTA (JP): The Indonesian Importers Association asked the
government yesterday to ease restrictions on imported used
vessels and reduce tax burdens on local shippers to strengthen
the country's shipping services.

The association's chairman, Amirudin Saud, told a hearing with
the Trade and Logistics Commission of the House of
Representatives that the government's policy barring the
importation of used ships has forced many Indonesian ship owners
to sail their vessels under foreign flags.

The importation of used vessels is restricted to protect the
local shipbuilding industry.

"If the condition remains, I'm sure more Indonesians will buy
used ships and raise the Panama flag on them," Amirudin said.

At least 100 Indonesian ships are flying Panamanian colors
because of the advantages it offers, such as lower taxation and
its Colon Free Zone, which is the world's second largest free
zone after Hong Kong. A free zone is a port where no duties are
imposed on ships that load or unload.

Panama's Consulate-General Raul A. Eskildsen, who visited here
last week, is convincing more and more Indonesian ship owners to
take full advantage of the services provided by his country's
flag of convenience.

Amirudin also asked the government yesterday to reduce tax
burdens on local shipping firms. Local firms cannot compete with
foreign shipping companies not only due to their weaker fleets,
but also because of their heavier tax burdens.

"If the government won't reduce the tax burden on local
shipping firms, it should at least impose the same taxes on
foreign shipping companies operating in Indonesia so that our
shipping firms will be able to compete better," Amirudin said.

Levies

Local shipping companies are required to pay a number of
levies for operation and docking as well as income taxes, import
duties and sales tax.

Tax Director General Fuad Bawazier said last December that the
withholding tax imposed on foreign shipping companies will be
increased as part of the government's tax expansion program. But
the government's newest tax rulings, announced here last week, do
not cover such a withholding tax.

Foreign shipping companies presently transport around 90
percent of Indonesia's export and import goods and another 40
percent of goods shipped within the country.

Amirudin noted yesterday that Indonesian importers and
exporters have very little "say" in deciding what shipping
companies will be used to transport their planned export or
import goods.

Most importers, he said, open letters of credit for their
overseas suppliers with Cost, Insurance and Freight
arrangements, while most exporters open letters with Free on
Board arrangements.

"Either way, we are very weak in deciding what shipping
companies will be used," Amirudin said.

The association also reaffirmed its support of the present
pre-shipment inspection procedure, which it claims is the most
effective and efficient system for securing smooth import flows,
preventing administrative smuggling and safeguarding government
receipts from import duties.

"The pre-shipment inspection system, which was launched in
1985, is the best since we declared our independence in 1945,"
Amirudin contended. (rid)