Wed, 24 Mar 1999

Government reduces export taxes on wood products

JAKARTA (JP): The government has reduced the export taxes imposed on logs, sawn timber and raw rattan to 20 percent from 30 percent, despite mounting complaints from local wood processing industries over the scarcity of logs in the local market.

The Ministry of Industry and Trade announced on Tuesday that the cut to the export tax, which became effective on March 16, was made to comply with the economic reform program agreed to by the government and the International Monetary Fund (IMF) in exchange for the agency-brokered multibillion dollar bailout.

In June, as part of its agreement with the IMF, the government cut the export tax on logs, sawn timber and raw rattan to 30 percent from as high as 200 percent. The government pledged to further reduce the tax to 20 percent by the end of 1998 and 15 percent by the end of 1999.

Local wood processing industries opposed the cut to the export tax, saying the move has resulted in a scarcity of logs in the local market.

Minister of Forestry and Plantations Muslimin Nasution said last month he had asked for the IMF's approval to postpone the export tax reduction to prevent the domestic timber supply from dwindling further.

But the IMF insisted the government continue with the reduction plan, he said.

The ministry of forestry and plantations has set an export quota of 5 million cubic meters of logs, 1.5 million cubic meters of sawn timber and 23,500 tons of raw rattan for the 1998/99 fiscal year ending next month to protect the local supply.

The Ministry of Industry and Trade said the government has licensed 40 companies to export a total of 747,273 cubic meters of logs but only 13 of them realized this amount, exporting only 154,895 cubic meters as of March, which is only 20.7 percent of the export quota given to them.

The government has given licenses to export 3,550 tons of raw rattan to three companies. Export volume as of March was only 533.18 tons or 15 percent of the quota given to the three companies, generating US$544,727 in foreign revenue.

The ministry said that so far no companies have applied for licenses to export sawn timber.

It also said that most companies were still reluctant to export their timber because local sales were now more profitable because of better prices due to the scarcity of domestic timber. (gis)