Govt officially cuts import tax from China

Zakki P. Hakim, Jakarta

The Ministry of Finance has issued two decrees to cut import tariffs on agricultural products from China as part of early measures to implement a free trade agreement between the Association of Southeast Asian Nations (ASEAN) and the world's most populous nation.

The decrees are Ministerial Decree No. 255/KMK.01/2004 and Ministerial Decree No 356/KMK.01/2004, which took effect on July 21.

The decrees cut a total of 573 tariffs, including 46 tariffs as part of the bilateral agreement between China and Indonesia and 527 tariffs as part of the "early harvest package" (EHP) agreed upon by ASEAN and China in Phnom Penh on Nov. 4, 2002.

The EHP covers agricultural products specified in Chapter 1 to 8 of Customs Harmonized Systems (live animals, meat, fish, dairy produce, other animal products, live trees, vegetables, fruit and nuts), except sugar.

The EHP is the first step toward the full implementation of a free trade agreement between China and ASEAN in 2010.

Under the EHP, China and six more economically developed ASEAN countries -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- should start to slash tariffs on agricultural products to 10 percent or lower starting Jan 1, this year and zero percent in Jan. 1, 2006.

The ministry said in the statement that the EHP tariffs were only applicable to imports from China that had the Certificate of Origin (Form E).

"The certificate is not necessary if the EHP tariffs are above or at the same level as the normal tariffs," said the statement, signed by the ministry's public relations head Maurin Sitorus.

Earlier, the Ministry of Industry and Trade's director general of international cooperation Pos M. Hutabarat said that President Megawati Soekarnoputri had issued Decree No. 48/2004 on June 15 to ratify the FTA between ASEAN and China.

"With the FTA, we aim to double our export value to China," he said.

Ministry' data shows that Indonesia's exports to China stood at US$5.75 billion last year, whereas exports to neighboring Malaysia and Thailand had reached $14 billion and $8.83 billion respectively.

According to Hutabarat, Indonesia, as a member of ASEAN, was expected to cut or remove tariffs on 95 percent of export-import products, when the FTA between ASEAN and China comes into full effect in 2010. They will be free to set tariffs on the remaining 5 percent, classified as sensitive products, including electronics and automotive products.