Government unlikely to impose tax on shrimp

Zakki P. Hakim, Jakarta

The government is unlikely to apply a 40 percent import tax on shrimp as suggested by some because it could prompt other countries to retaliate against Indonesia, according to a senior official.

Arif Adang, a senior official at the Ministry of Industry and Trade, said the ministry was instead studying non-tariff alternatives to help curb the inflow of cheaper imported shrimp, which has hurt local farmers because of declining prices.

"The tariff team will not agree to impose import tax," he told The Jakarta Post on Friday, referring to a special government team that decides import tax policies. Arif is also a member of the team, which consists of officials from relevant ministries.

The Ministry of Fisheries and Maritime Affairs and domestic shrimp farmers earlier called on the Ministry of Finance to impose a 40 percent import tax on the commodity. The proposal was submitted to the Ministry of Industry and Trade, which then passed it on to the Ministry of Finance. Currently, no import duty is applied on shrimp.

The World Trade Organization (WTO) allows a country to impose a maximum 40 percent import tax on the commodity.

But Arif said that if Indonesia imposed tax, countries affected by the policy could introduce retaliation measures, which in the end could hurt Indonesia's exports to these countries.

Shrimp imports are mainly from China, Vietnam, Thailand, Malaysia, India and Bangladesh, which have been affected by the U.S. antidumping policy.

Under the ASEAN free trade arrangement, Indonesia and other member countries of the Association of Southeast Asian Nations must have already cut down import tax on all commodities to between zero percent and 5 percent. Indonesia has also signed a free-trade agreement with China, which is expected to start within six months.

"These countries could retaliate if we impose an import tax," Arif said.

He explained that the ministry was studying such non-tariff measures as implementing a certificate of origin, limiting import volume and temporary suspension measures to protect local farmers.

He added that the ministry would hold seminars to gather input before making a decision.

Meanwhile, Bambang Suboko of the Indonesian Fisheries Industry Association (Gappindo) said that shrimp imports were relatively insignificant.

He said that declining prices here was mainly caused by overproduction globally.

"The white shrimp (pineaous vannamei) global price drops and drags down prices of other shrimp species," he said.

Vannamei shrimp accounts for 20 percent of Indonesia's shrimp production.

Bambang was more concerned that imported shrimp was mainly reexported to the U.S. as Indonesia had not been affected by the U.S. antidumping policy.

"This is shrimp laundering," he said.

Indeed, data from the Ministry of Industry and Trade shows that Indonesia's shrimp exports to the U.S. until April of this year had reached 10,202 tons, nearly half of last year's total of 21,662 tons.

Shrimp is Indonesia's top export commodity in the agricultural sector, the value of which reached US$2.45 billion and $2.59 billion in 2001 and 2002 respectively.