Exporters in bonded zones want incentives restored

Exporters in bonded zones want incentives restored

Adianto P. Simamora, The Jakarta Post, Jakarta

Industrial estate operators urged the government to restore
incentives for exporters operating inside bonded zones, and
exempt them from a slew of local regulations issued since the
dawn of local autonomy.

Association of Industrial Estates chairman Rizal Bahroni said
the attraction of operating in a bonded zone had disappeared
since local autonomy took effect last year.

"Some 20 companies have left bonded zones and another 20 are
considering to reducing their operations due to the impact of
local regulations and the uncertainty over incentives from the
government," Rizal said.

In 1989, the government granted a number of industrial estates
bonded zone status. This means that export-oriented companies
could import raw materials or capital goods used for production
tax free.

The government also offered such firms a one-stop export
document and permit service.

However, the government has now tightened up the list of goods
that may be imported tax free into bonded zones, while new
regulations issued by local governments have diluted the
remaining incentives, said Rizal.

"Today, there are no set policies for incentives as the
government also imposes tax on some raw materials," he claimed.

In addition, he said, exporters faced various levies imposed
by local administrations resulting in the loss of any benefits
arising from the one-stop service policy.

Rizal said he had brought these problems to the attention of
the Crisis Center, a recently established body under the Ministry
of Industry and Trade tasked with seeking solutions to various
problems faced by business.

Data supplied by his association shows that the country has
eight bonded zones. They are Besland Pertiwi in Cikampek, West
Java, Cibinong Center Industrial Estate in Cibinong, West Java,
Megalopolis Industrial Development in Karawang, West Java,
Lamicitra Nusantara in Semarang, Central Java, Dharmala Ngoro,
East Java, Surabaya Industrial Estate Rungkut, Pasuruan, East
Java, and Lamhotma Medan in South Sumatra.

Rizal added that Indonesia needed to maintain the
competitiveness of its bonded zones, or otherwise companies would
relocate their operations to neighboring countries.

"Even countries in this region with better facilities, such as
the Philippines, Vietnam, and Taiwan, are offering tax incentives
to attract investment," he said.

Indonesia's export sector has been hit hard by the country's
adverse business climate and a prolonged slump in the global
economy.

Among the recurrent problems facing investors are endemic
corruption, security worries, labor strife and the absence of a
credible legal system.

Exports revenue contributes some nine percent to growth in the
economy, as measured by its gross domestic product (GDP), which
is the annual value of goods and services Indonesia produces.