Govt slashes tariffs, taxes and levies

Govt slashes tariffs, taxes and levies

JAKARTA (JP): The government has cut import tariffs on 1,600
items, slashed the number of local taxes and fees, banned new
loans for land acquisition and development, and allowed imports
of used cargo and fishing vessels.

These measures were stipulated in a new package of economic
reforms which was announced, after several delays, by
Coordinating Minister for Economy and Finance Saleh Afiff
yesterday.

"The measures are a continuation of preceding deregulation
policies aimed at improving efficiency and simultaneously to
confirm our commitment to multilateral trade agreements," Afiff
told a press conference.

Afiff was accompanied at the conference by Coordinating
Minister for Production and Distribution Hartarto, Minister of
Finance Mar'ie Muhammad, Ministry of Industry and Trade Tunky
Ariwibowo and Bank Indonesia Governor J. Soedradjad Djiwandono.

The package cuts tariff rates on 1,461 industrial products,
136 agricultural commodities and three health products.

"After this latest deregulation package, 62.55 percent of the
total tariff codes will be in the range of 0 to 10 percent," said
Afiff.

Afiff said the number of items with zero tariff rose to 1,419
from 1,399, while the number of items with a 5 percent tariff
rose to 2,275 from 2,066, those with 10 percent tariff increased
to 1,556 from 610.

"This reform decreased Indonesian average, unweighted import
tariffs from 13 percent to 11.9 percent, the second lowest in
Southeast Asian countries after Singapore," he said.

Details

No further details on the tariff reductions were immediately
available as the ministers announced only a summary of the
ministerial decrees, rules and directives which enforce the
measures.

A complete set of the measures in technical detail is to be
distributed today.

The government last year introduced two reform packages in
January and June, respectively.

The measures also free imports of used fishing and cargo
vessels in a bid to further develop efficient inter-island
freighter services and bolster the fisheries industry.

In an another concerted drive to reduce the costs of doing
business here, that business people have complained about, the
number of local taxes was cut from 42 to nine and local fees or
levies from 192 categories to 30 categories.

"Regional taxes and retributions will be levied only with the
approval of the Minister of Home Affairs after consultations with
the Minister of Finance," said Afiff.

In an effort to control increased lending to the property
sector, Bank Indonesia issued a decree yesterday which bans new
loans for land acquisition and development by property companies,
except for the development of cheap housing.

The package also allows sugar mill owners to import raw sugar.
Previously only the National Logistics Agency was allowed to
import raw sugar.

Small exporters will get another significant boon from reduced
red tape as the package increases the value of exports without an
export declaration form from Rp 100 million (US$41,666) to Rp 300
million.

The system of export tax on palm oil was simplified and export
tax rates were cut to a range of 2 percent to 5 percent from a 10
percent to 12 percent range to encourage exports of refined palm
oil.

The package eliminates the fee and cash guarantee imposed on
applications for business licenses and allows the export of scrap
stainless steel, brass and copper.

It also allows foreign investors to set up auction companies
in joint ventures with domestic firms.

The duty exemption previously granted on raw material and
capital goods imports only to domestic and foreign investment
companies licensed by the Investment Coordinating Board is now
extended to investment ventures administered by other agencies
such as the industry and trade ministry and local
administrations. (jsk/vin)

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