Govt support for 'Blue Sky' project may spark protest
Fitri Wulandari, The Jakarta Post, Jakarta
An activist has expressed fears that the government's plan to exempt taxis fueled by natural gas from import duty as part of the effort to promote clean energy usage could violate free trade principles and spark protests from other countries.
Ahmad Safrudin, chief executive of the Joint Committee for the Phasing Uut of Leaded Gasoline (KPBB), said that giving special treatment to certain products was discriminatory.
Such discriminatory treatment would violate the free-trade principles set by the World Trade Organization (WTO), Ahmad told The Jakarta Post on Friday.
He warned that any protests would have severe implications for Indonesia as the aggrieved nations would retaliate against Indonesia's exports, thereby affecting the country's economy.
"The idea to support the 'Blue Sky' project is good, but I'm afraid it will only make another problem for the government," Ahmad said.
The Ministry of Transportation said on Wednesday that it had asked the Ministry of Finance to exempt taxis fueled by natural gas from import duty.
It is part of the ministry's drive to support the clean air project.
Ahmad warned that if the government did not carefully prepare the scheme, it would repeat the same mistake made with the controversial national car project launched in 1996.
At that time, the government exempted components for locally owned and produced makes from luxury sales tax and import duties, saying that this was necessary for the development of the domestic automotive industry.
PT Timor Putra Nasional, owned by Hutomo "Tommy" Mandala Putra, son of the then president Soeharto, was awarded a concession to produce "national" cars in collaboration with South Korea-based Kia Motor Corporation.
The policy sparked strong protests, especially from Japan whose car producers held 95 percent of the automotive market in Indonesia at the time. Japan even threatened to take the case before the WTO.
Ahmad suggested that instead of granting import duty exemptions, it would be better to give incentives and discounts as soon as the taxis went into operation in the country.
"The government could give discounts in respect of the annual road tax that must be paid or provide incentives for using natural gas," Ahmad said.
Meanwhile, Iskandar Abubakar, director of urban transportation systems at the Ministry of Transportation (not Iskandar Abdullah as stated in The Jakarta Post on Wednesday), brushed aside these concerns, saying that the government had carefully planned the move so that it would not violate or conflict with free trade principles.
"We will not give any special treatment to products from a certain country. Any producers can propose an import duty exemption as long as they meet our criteria," Iskandar said on Friday.
He explained that to get an exemption, the car producers should meet two criteria -- firstly, that the products be sent here in completely knocked down form and secondly, that they be specially designed to use natural gas.
Iskandar also clarified his previous statement that out of 15,000 cars to be exempted from the tax, only 5,000 would be sold in Jakarta while the remaining 10,000 would be sold in other cities.
Under the scheme, he added, taxi companies would receive many benefits, ranging from inexpensive fuel to clean energy and low maintenance costs.
According to Iskandar, natural gas is currently sold at Rp 440 per liter compared to premium gasoline at Rp 1,500 per liter.