Govt officially cuts import tax from China

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.