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)