Government to announce planned tarrif changes

Urip Hudiono and Zakki P. Hakim, The Jakarta Post, Jakarta

If all goes to plan businesspeople will find out today just what has changed after the government officially announces revisions to import duties on 237 products.

In a teaser announcement on Tuesday, Minister of Finance Yusuf Anwar said the revisions to be announced on Wednesday would include 144 cuts to subsidies and 93 increases.

"The adjustment will improve the competitiveness of our industries and provide certainty for investors," Yusuf said following a meeting with the Minister of Industry Andung A. Nitimihardja.

The products on which duties would change included goods from the agricultural, fisheries, mining, pharmaceutical and ceramic industries, he said.

Yusuf said industries were keenly awaiting the policy.

"Moreover, it would also provide more revenues from import duties, improve our consistency in conforming with the global trade system, and have measures to cut down red tape and curb smuggling," Yusuf said.

Ministry tarrifs team head Anggito Abimanyu said the move was part of plans to slash all tariff barriers to between 5 percent and 10 percent by 2010, except for sensitive commodities such as rice and sugar. Their duties stand at 30 percent and 40 percent, respectively.

The team groups officers from different government departments in charge of coordinating tariff issues.

"The policy will also exclude tariffs which have been agreed upon through multilateral and regional trade agreements, such as with fellow ASEAN countries and World Trade Organization (WTO) members," he said.

Anggito said the policy would give domestic industries a breathing space to improve their competitiveness against imported goods.

Import duties for some ceramic goods for example, which would be increased by up to 20 percent next year before they were reduced to between 5 percent and 10 percent.

Although the policy would not directly increase state revenues, it was expected to improve the business climate and encourage domestic industries to be more efficient.

"We expect our moves will have a multiplier effect -- raising production capacity that will in turn boost tax income and eventually provide more jobs," he said.

Ministry director general for customs and excise Eddy Abdurahman said the plan would simplify the custom officials' verification of imported goods and make it more difficult to smuggle goods.

The business community has long complained that irregular and unharmonized import duties had long hampered industries in the country.

In some sectors, raw materials have higher import duties than their end products, making local manufacturers less competitive.