Govt asked not to cut log export tax further
Govt asked not to cut log export tax further
JAKARTA (JP): Legislator Umbu Mehang Kunda has called on the
government to delay the reduction of the export tax on logs to
guarantee a sufficient supply for local wood-processing
companies.
Umbu, the chairman of House of Representatives Commission III
for agriculture, forestry and plantations, transmigration and
food affairs, said maintaining the existing export tariff would
encourage exports of processed wood.
"The government should renegotiate with the IMF (the
International Monetary Fund) the agreement on the export tax on
logs but it should not contravene the government's reform program
agreed earlier with the IMF," Umbu said Tuesday.
He said that a further cut in the export tariff would
encourage timber companies to export their logs rather than
processed wood.
The government imposed a 200 percent export tax on logs in
recent years before easing it to comply with the program agreed
with the IMF.
In accordance with economic reform programs signed Jan. 15
with the IMF, the government agreed to reduce export taxes on
logs, sawn timber and rattan to 30 percent by the end of June, 20
percent by the end of December this year, 15 percent by the end
of December 1999 and 10 percent by December 2000.
"If the tariff is cut further, Indonesian wood-processing
industries will be on the verge on bankruptcy due to the scarcity
of logs. Besides, it will lead to the further destruction of the
country's forests," he said.
"Exporting logs is a setback for Indonesian timber companies.
So, I urge them to prioritize domestic demand."
He said timber companies should be allowed to export only
after local demand had been met.
The Indonesian Forestry Society said earlier this month that
local wood-processing industries were currently operating at only
30 percent to 40 percent of their production capacity due to the
scarcity of logs.
The situation will get worse if timber companies exported
their logs without considering local demand, it said.
The Association of Indonesian Wood Panel Producers (Apkindo)
said that the reduction of the export tax on logs would only
benefit foreign wood-processing industries.
Apkindo's production director, Martias, said wood importers
such as the United States and European countries were imposing
high import duties on Indonesian plywood.
"It is not fair because we've reduced the export tax on logs
but are still burdened by high import duties," Martias said.
(gis)