Export tax plan for commodities not effective: Experts
Export tax plan for commodities not effective: Experts
Adianto P. Simamora, The Jakarta Post, Jakarta
The government's plan to impose export tax on certain commodities
such as raw leather and cocoa products will not be effective in
curbing the export of the commodities, industry associations
said.
The tax is supposed to discourage export of the commodities to
help provide domestic manufacturers with sufficient supply of raw
materials at affordable prices.
"It is too late because the price of raw leather is already
relatively stable here," Diyono H. Sasmito, chairman of the
Indonesian Tanners Association, told The Jakarta Post on Sunday.
He added that the policy would not bring much benefit to the
tanning factories as hundreds of them had closed down due to the
slow response of the government in resolving the recent raw
material shortage.
He criticized the finance minister for being to slow in
responding to previous calls for imposing a 20 percent to 30
percent export tax on raw leather to help limit the export of the
commodity.
The government is currently planning to issue a regulation
that would effectively impose an export tax on certain
commodities. The regulation has yet to be approved by President
Megawati Soekarnoputri.
The government removed export tax on raw leather in 2000 to
meet the economic reform programs set by the International
Monetary Fund (IMF).
In 1998, the export tax stood at between 200 percent and 300
percent.
The removal of the export tax had resulted in a shortage of
raw materials at home.
Currently, there are only 47 medium and big tanneries across
the country with a total production of 72.5 million feet per
year, as against 112 tanneries with a total annual output of 210
million feet in 1998.
The number of workers in the industry have also declined from
12,560 in 1998 to only 5,620 in 2001.
Meanwhile, the Association of Indonesian Cocoa Exporters
(Askindo) warned that the government's move to impose export tax
on cocoa beans would further burden cocoa farmers.
La Odi Mandong, secretary-general of the association said that
exporters would in turn pass on the burden to farmers.
"Of course, farmers will always be in a difficult position,"
La Odi said as quoted by the Kontan weekly economic tabloid.
Indonesia, the world's second largest cocoa producer after the
Ivory Cost, currently imposes no export tax on cocoa beans.
La Odi added that the move would also encourage foreign buyers
to buy cocoa beans directly from local farmers.
The country's cocoa output is expected to reach some 430,000
tons this year. The country exports up to 80 percent of the cocoa
output to the United States, Singapore, Malaysia and Brazil.
The Ministry of Industry and Trade has proposed to the
Ministry of Finance the imposition of an export tax of between 5
percent and 20 percent on cocoa beans.
The government currently imposes 10 percent value-added tax
and 2.5 percent income tax on the sale of cocoa beans from
traders to the local grinders. This has resulted in a shortage of
cocoa bean at home as both traders and farmers prefer to export
rather than sell to local grinders.
Cocoa beans are processed by grinders into butter and powder
which are then used by the food industry to make chocolate
products.