Export tax bill on the works

Export tax bill on the works

Dow Jones, Jakarta

The Ministry of Finance has drafted a bill aimed at taxing raw or semifinished industrial and agricultural products exported out of the country, a senior government official said on Friday.

"The bill is aimed at ensuring sufficient supply of raw materials for domestic industry, and stabilizing commodity prices in the domestic market," said Muhammad Najib, director of exports for agriculture and mining products at the Ministry of Trade.

The Ministry of Finance has already submitted the bill to the President for approval.

Currently, the government has in place a system of export taxes on raw and semifinished products, but the taxes do not apply to all goods. For example, exports of palm oil products are subject to 1 percent to 3 percent in taxes, while cocoa bean exports are not taxed at all.

It is not immediately clear whether the new law will apply to all goods.

The bill would not stipulate what commodities will be subject to the export levy, Nadjib said.

"A list of commodities will be proposed by related ministries such as the Ministry of Agriculture and Ministry of Industry after the bill is passed," he said.

The finance ministry will then determine the export tax based on the list of commodities submitted by the ministries, said Nadjib.

The government has already agreed that cocoa beans -- a key agricultural export -- will top the list of commodities to be taxed, according to M. Yamin Rachman, director of agro industry at the Ministry of Industry.

The tax to be levied on cocoa beans is expected to ease a domestic supply shortage, which has persisted for years.

A 10 percent value-added tax imposed in 2000 on all primary agricultural commodities sold to domestic processors has prompted growers to export up to 80 percent of the country's total cocoa bean output to avoid the tax.

Last year, Indonesia's cocoa grinding industry only operated at half of its installed capacity of 310,000 metric tons a year due to a lack of cocoa beans.

Yamin said an initial 2 percent to 3 percent export tax on cocoa beans will be proposed.