Govt defends protection of PT Chandra Asri
Govt defends protection of PT Chandra Asri
JAKARTA (JP): State Minister for Investment Sanyoto
Sastrowardoyo defended the government's plan to protect PT
Chandra Asri, the country's first olefin plant, against imports
yesterday.
Sanyoto said that an infant industrial plant, such as that
owned by Chandra Asri, still needs the government's protection to
allow it recoup its huge investment.
Chandra Asri's plant, constructed in Cilegon of West Java with
an investment of US$1.7 billion, is scheduled to start operating
next year. The company is controlled by Prayogo Pangestu, a
timber tycoon.
"Upstream chemical plants encounter greater difficulties
competing with advanced plants as the return on their investments
normally take a longer period of time," he told newsmen following
the opening of the first meeting of APB Net, an APEC business
forum.
The meeting of the business forum, established by national
business organizations of the 17-member Asia Pacific Economic
Cooperation (APEC) last year, will end today. The meeting is
attended by around 140 business executives of the organization's
member countries.
Sanyoto said the government has yet to decide how high the
tariff to be imposed on imported olefin products.
He stressed that the protection would not be exclusive as
other upstream chemical producers could also receive a similar
treatment.
First
"It will only be by chance if Chandra Asri is the first to
receive this kind of protection," he said as an indirect response
to the criticism made by a number of noted economists on the
government's exclusive protection to that company.
Sanyoto argued that the temporary protection given to Chandra
Asri is not against the free trade principles stipulated in the
General Agreement on Tariffs and Trade (GATT).
"Article 18 of GATT allows developing countries to protect
their infant industries," he said, adding that the protection
would not hurt intermediary chemical industries such as
polyethylene and polypropylene manufacturers since they are also
protected.
"So far, the government has imposed a 20 percent import duty
and 20 percent surcharge to protect locally produced polyethylene
and polypropylene," he argued.
Sanyoto, also the chairman of the Investment Coordinating
Board (BKPM), said that the protection would enable Indonesia to
save a huge amount of foreign exchange as local producers would
no longer import such products to feed up their chemical plants.
At present, Indonesia imports between US$1.2 billion and $1.9
billion of chemical products a year to feed more than 1,000
downstream chemical industries in the country.
In addition, he said, the operation of upstream chemical
industries will give added value to the country's oil industries,
which also produce basic materials for petrochemical industries.
"At present most of those basic materials are sold to
producers overseas," he said. (hen)