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)