Government scraps VATs to help shipping industry

Government scraps VATs to help shipping industry

JOHOR BAHRU, Malaysia (JP): The government took steps to help
the country's ailing shipping industry by lifting all value added
taxes (VATs) on the purchase and lease of ships, docking and port
services.

The director general for sea transportation at the Ministry of
Communications, Agus Rudyanto Ruwadi, said here on Saturday that
President B.J. Habibie issued a decree on Thursday eliminating
these 10 percent VATs.

"The measure is part of the government's commitment to develop
the country's shipping industry and prepare it for global
competition," Agus said on the sidelines of the ceremony marking
the delivery of crude oil and gas tankers from Malaysia Shipyard
& Engineering Sdn Bhd to PT Bumi International Tankers and PT
Layar Sentosa Shipping Corporation in Pasir Gudang, Johor Bahru,
Malaysia.

Local shipping companies have long complained about the high
taxes imposed on them by the government, blaming these taxes for
helping to cripple the development of the country's shipping
industry.

Secretary General of the Indonesian National Shipowners
Association Barens Saragih, also present at the ceremony, said
the association warmly welcomed the government's move.

"We really thank the government for realizing the importance
of increasing the competitiveness of the national shipping
industry," Barens said, adding countries such as Malaysia and
Singapore had long since removed value added taxes on their
shipping companies to help make them competitive.

Barens, however, called on the government to further
deregulate the country's shipping industry by scrapping the
remaining 1.2 percent corporate taxes as had been done by
Singapore and Malaysia.

"The shipping industry is part of the infrastructure. The
taxes imposed on it will multiply the prices of the commodities
it carries," Barens said.

He said that in the past the association had repeatedly called
on the government to take measures to strengthen the country's
shipping companies, arguing that the country could save more of
its foreign exchange earnings if national shipping companies
carried a larger portion of the country's exports.

However, the government under former president Soeharto paid
little attention to the shipping industry, focusing instead on
export-oriented companies.

Today, Barens said, national shipping companies transport only
3 percent of the country's exports, leaving the remaining 97
percent to be carried by foreign shipping companies.

Because of this, the country must spend billions of dollars
per year for the transportation of its goods.

Barens, however, said he was optimistic that national shipping
companies would be able to increase the percentage of the
country's exports that they transport, "provided that the
government is consistent with its deregulation policies". (jsk)