Govt asked to lower tariffs on plastics raw materials
Govt asked to lower tariffs on plastics raw materials
JAKARTA (JP): The Association of Indonesian Plastic Producers
called on the government yesterday to gradually lift tariff
protection on polyethylene and polypropylene.
"The protection given to polyethylene and polypropylene makes
them more expensive on the domestic market because the
international prices of the two products keeps on rising," said
Chairman Sarbini said at the association's congress, which
reelected him for a further four-year term.
Polyethylene and polypropylene are used in the production of
plastics, synthetic fiber, tires, pesticides, synthetic rubber,
and detergents.
The government continues to impose a 20 percent surcharge on
top of a 20 percent duty on imports of polyethylene and
polypropylene. The tariffs on the two products were not touched
by the deregulatory measures announced by the government on May
23.
Prices
Sarbini said international prices of polyethylene and
polypropylene had increased by as much as 60 percent since early
last year. He declined, however, to say what their current prices
were.
He said that, ideally, the surcharge on polyethylene and
polypropylene would not be more than five percent. He argued that
the function of surcharges was simply to prevent dumping
practices on the part of foreign producers.
"Dumping practices did occur until 1993. However, because the
international prices of polyethylene and polypropylene have been
increasing since 1994, those practices have ceased," Sarbini
said.
He said that if the tariff on the two products was not lowered
the plastic manufacturers who use them as their raw materials
would face increasingly serious problems.
"Plastic producers have to raise the prices of their products
whenever the prices of raw materials increase. However, it cannot
always go that way because the market is not always ready to
absorb the products. And, therefore, they have to forego a
portion of their profits or even go out of business," he said.
Contradiction
Sarbini said the protection of the two products was
inconsistent with the government's policy on tariff
harmonization, under which the government is reducing tariffs on
upstream industrial products and higher tariffs on downstream
products.
Minister of Industry Tunky Ariwibowo acknowledged in his
written address to yesterday's meeting that the tariff structure
which applied to the plastics industry was not yet harmonious.
Separately, Tunky said recently that the government was still
working on the tariff levels of some petrochemical products,
especially those which were not dealt with in the May 23 tariff
deregulation package.
Director General of Chemical Industries Sujata, who opened the
proceedings yesterday, said the 40 percent protection level given
to polyethylene and polypropylene would be gradually reduced to
10 percent by the year 2003, when free trade among the countries
of the Association of Southeast Asian Nations is due to come into
effect.
Commitment
"We are committed to abiding by international agreements to
which Indonesia is a signatory. So, there is no reason not to
reduce the level of protection given to the two products," Sujata
said.
According to PT Tri Polyta Indonesia, domestic demand for
polypropylene resins in 1993 stood at over 330,000 tons, of which
almost 50 percent was met by that company, which is listed on the
Nasdaq stock exchange in the United States.
Sarbini thanked the government yesterday for not increasing
the import duties on ethylene and propylene -- raw materials for
the production of polyethylene and polypropylene -- from their
current level of five percent.
However, some analysts are predicting that the government will
increase tariffs on ethylene and propylene in response to a
request from the politically well-connected company PT Chandra
Asri, the country's only olefin producer. Last year Chandra Asri
asked the House of Representatives to impose tariffs of between
35 percent and 40 percent on imports of olefin products -- mainly
ethylene and propylene. (rid)