Govt plans to raise export taxes on raw leather
Govt plans to raise export taxes on raw leather
The Jakarta Post, Jakarta
The government plans to reimpose export duties on raw leather
to ensure sufficient supplies of the commodity on the local
market, a senior official at the Ministry of Industry and Trade
said on Monday.
Ferry Yahya, the ministry's director of agricultural and
mining product exports, said the export duties would be set at
between 20 percent and 25 percent, compared to zero percent at
present.
"Minister of Finance Boediono has in principle agreed to
reimpose the export duties. We are now waiting for the issuance
of a ministerial decree," Ferry told The Jakarta Post, adding
that the new policy was in line with demands from the industries
that relied on raw leather.
Calls for the reimposition of the export duties have come from
the Indonesian Tanners' Association and the Indonesian Footwear
Association, both of whom claimed the zero duty policy applied by
the government to raw leather had resulted in supply shortages on
the local market, thus hurting their businesses.
They also called on the government to ease the rules curbing
the commodity's importation.
Export taxes on raw leather stood at between 200 percent and
300 percent before the government totally removed them to comply
with the economic reform program agreed upon with the
International Monetary Fund (IMF).
Exports of the commodity then surged on the rise in its price
on the international market, causing a shortage of supplies on
the local market.
The situation worsened following the government's move to
impose tighter requirements on the importation of the commodity
amid fears that imports could bring foot-and-mouth disease into
the country.
Indonesia imports raw leather from India, Pakistan, Brazil,
Australia, Argentina, France, Germany and the United States.
The number of local tanneries has continued to decrease due to
the lack of raw materials.
Data from the industry associations earlier showed that there
were now only 47 mid-sized and large tanneries across the country
with a total production of 72.5 million feet per year compared to
112 tanneries with a total annual output of 210 million feet in
1998.
The number of tannery employees also declined from 12,560 in
1998 to 8,670 in 2000 and 5,620 in 2001.
The association claimed that plants owned by local companies
were now running at only 22 percent of capacity.
The lack of raw leather supplies had also hurt the country's
footwear industry, which employs millions of workers.