Govt lowers tariffs on over 6,000 items
Govt lowers tariffs on over 6,000 items
JAKARTA (JP): The government introduced a new deregulation package yesterday, cutting tariffs on 6,030 items and opening up 10 previously restricted business sectors.
Coordinating Minister for Economy and Finance Saleh Afiff said the deregulatory measures had been introduced in anticipation of tougher competition in the era of trade liberalization.
The deregulation measures cover five main sectors, including import duties and surcharges, import restrictions, investment, business licensing procedures and the trading of goods in export processing zones.
Minister of Finance Mar'ie Muhammad said that the deregulatory measures lowered tariffs on 64.16 percent of the 9,398 commodities on the government's tariff list.
The most significant feature of this latest deregulatory package is the introduction of schedules on tariff reductions between now and the year 2003.
Mar'ie said that the tariff reduction schedules were essential to provide business certainty and to comply with the country's tariff commitments under the ASEAN Free Trade Agreement, the General Agreement on Tariffs and Trade (GATT) and the Bogor Declaration of the Asia Pacific Economic Cooperation forum.
Import tariffs of less than 20 percent will be gradually reduced to a maximum of five percent by 2000, while those above 20 percent will be gradually lowered to a maximum of 20 percent by 1998 and to a maximum of 10 percent by 2003. The tariff reduction schedule in respect of certain farm products will be adjusted in accordance with GATT commitments.
Time frames
Mar'ie said the time frame would not apply in relation to tariffs which were already five percent or less, such as those on flour, rice, wheat, soybean, palm oil, sugar and several industrial products like cement and asbestos.
He said tariffs of between 10 percent and 35 percent are to be lowered by five percentage points, including those on textile products, plastics and medical raw materials, while tariffs of 40 percent such as those on orchids, soap and materials used in paint manufacture are to be cut to a maximum of 30 percent.
The reduction of tariffs on certain products, such as automotive vehicles and a number of chemical and metal products, is not governed by the schedule. However, none of these may be subject to tariffs of more than 10 percent by 2003, he said.
Minister of Industry Tunky Ariwibowo said the import duty on components used in locally-assembled sedans had been reduced from 175 percent to 125 percent and would be further lowered to 40 percent by the year 2003. The import surcharges on cars not assembled locally have been cut from 100 percent to 75 percent and are to be reduced further to 50 percent by the year 2003.
The tariff on pick-ups has been reduced from 60 to 50 percent and will fall further to 30 percent by the year 2003, the tariff on mini buses from 100 to 75 percent and then to 30 percent by 2003, on light trucks from 40 to 30 percent and on jeeps from 100 to 75 percent and then to 30 percent by 2003. The tariff on heavy-duty trucks is set to remain at five percent.
The import surcharge on fully-imported commercial vehicles has been reduced from 40 to 30 percent and will be cut to 20 percent by 2003.
Tunky said that by the year 2003 import tariffs on manufactured goods, with the exception of automobiles and alcoholic drinks, would not exceed 10 percent.
Yesterday's package includes tariff cuts well ahead of its own general timetable. The tariff on newsprint, for example, has been reduced from 20 percent to five percent and that on printing paper from 20 percent to zero.
"The tariff on cooking oil made from soybean and sunflower was also reduced to zero percent from between 15 percent and 20 percent," he said.
Tariffs on certain intermediate products and certain capital goods such as sawn timber for the wood processing industry, printing ink, glass fiber and paints have been lowered to between five percent and 25 percent from the previous range of 10 percent to 40 percent.
Restructuring
Capital goods imported for business restructuring with a value of at least 30 percent of the initial investments are also exempted from import duties.
A number of previously closed industries such as cooking oil refining, semi-finished rattan production, automotive industry, boiler manufacture and aircraft maintenance will be opened to new investors, Afiff said.
The deregulation package removes restrictions on the importation of 81 types of products which could previously be imported by registered importers, "producer importers" and Bulog, the national logistics agency.
Products affected by this reform include steel plates, matches and jute sacks. The package leaves untouched, however, the controversial restrictions applying to the importation of soy beans, alcoholic beverages, automotive vehicles, rice, flour, sugar, cloves, explosives, lubricants, plastics and pesticides.
The package also provides certain incentives to promote investment in entrepots and industrial bonded zones.
Indonesia has introduced a series of deregulation packages since 1983, covering a wide range of business sectors, from banking to trade and industry. (hen)