Govt eases regulation on imports

Govt eases regulation on imports

JAKARTA (JP): The government yesterday announced a new package
of deregulation measures to streamline the economy by
liberalizing the import sector in what it said is an
"anticipation of post-Uruguay Round development in world trade".

The new measures cut down import duties on 739 kinds of goods,
removed non-tariff barriers from 27 commodities and lifted
surcharges from 108 other import items.

Coordinating Minister for Economy and Finance Saleh Afiff said
the new move is a follow up to the previous "packages of
deregulation measures," including one issued in October 1993 and
the latest ruling (PP20 of 1994) that significantly eased
restrictions on foreign investment.

"The aim this time is not only sectoral, such as boosting
investment, efficiency and productivity, or to increase non-oil
exports, or to expand business and job openings, but to step up
the whole spectrum of development activities directed to enhance
national economic and resilience," Saleh Afiff said.

The Coordinating Minister announced the rulings at Bina Graha
moments after he and eight other ministers had a meeting with
President Soeharto.

The other ministers were Coordinating Minister of Industry and
Trade Hartarto, Minister/State Secretary Moerdiono, Tunky
Ariwibowo (industry), S.B. Joedono (trade), Sjarifudin Baharsjah
(agriculture), Ibrahim Hasan (food), Subiakto Tjakrawerdaya
(cooperatives and small businesses) and Mar'ie Muhammad
(finance).

Saleh Afiff said the government wants to gradually harmonize
the tariff rates in Indonesia by reducing most of them, in step
with GATT and AFTA (ASEAN Free Trade Area) agreements.

Only a very low import duty will be charged on raw materials,
intermediate goods and capital goods to be used by the
manufacturing industry. In many cases, this import duty was
eliminated altogether.

New projects will no longer be entitled to any commitment of
tariff escalation. Rather, they must comply with the going and
reduced tariffs.

For the expansion of investment a new import facility has been
introduced. Now, any firm intending to invest new money for the
expansion of installed production capacity by at least 30 percent
is offered duty reliefs for the import of raw materials and
intermediate goods for up to two years.

In the past, the two-year import duty relief was extended only
to investment expansion which was designed to produce different
products from different raw or intermediate materials. This
resulted in a tendency for firms to create a new firm in order to
qualify for the facility.

Bonded zone

In relation to bonded zone and Production Entrepot for Exports
(EPTE), from now on all assembling activities and lending of
machineries and equipment by enterprises in bonded zones or EPTE
to companies outside the zone or EPTE as subcontractors are no
longer prohibited for up to two years.

Meanwhile a new rule helps a component manufacturers outside
bonded zones or EPTE (indirect exporters) to compete by allowing
them to credit the Value Added Tax (VAT) on their raw materials
(inputs) against the VAT on their output sold to other industrial
users in bonded zones or EPTE.

The government said any price distortions caused by dumping
activities by foreign parties will be prevented by anti-dumping
policies.

Under the new measures, the import duty will be eliminated on
agricultural products used as raw materials or intermediate goods
for the livestock industry -- such as fish meal, shrimp meal,
barley, peanut meal, soybean meal, sorghum, bone meal and meat
residue.

Tariffs on textile machinery and components are to be reduced
by 10 to 25 percent.

Those on agricultural machineries are to be reduced between
five to 20 percent.

Import duties on machinery for small industries are to be
reduced to five percent of their former level or, in some cases,
totally eliminated.

Import tariffs on foreign assembled passenger cars and station
wagons are to be reduced by 25 percent, and semi-trailer spare
parts is to be reduced by 10 percent. The tariff on work vehicles
will be completely eliminated.

Import duties on components and sub-components for the
assembly of heavy-duty equipment are also to be completely waived
beginning Jan. 1, 1995.(17/vin))