Govt support for 'Blue Sky' project may spark protest

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.