Govt to expand incentives to boost non-oil exports
JAKARTA (JP): The government will expand its export tax incentives to cover more products and companies in a bid to boost non-oil exports, Minister of Industry and Trade Tunky Ariwibowo said yesterday.
Speaking after a meeting with President Soeharto, Tunky said the facilities currently provided to exporters of textiles and textile-related products, shoes, electronics, wood and rattan products and leather goods had helped bolster their exports.
"Therefore, the government plans to extend the preferred exporter category to products other than those (five categories of) products, " Tunky said.
He said the government was still undecided on how many more export products were to receive facilities under the preferred exporter category because this had yet to be stipulated through a ministerial decree.
"We will announce it after Lebaran (Idulfitri)," Tunky said.
The government currently gives special tax and customs reliefs and loan facilities to exporters of those five categories of products.
Customs and tax breaks are in the form of credited import duties or faster drawbacks or repayments of imports duties paid for imported raw materials and of value added tax paid for inputs purchased from domestic suppliers.
The banking incentives for exporters in the five sectors include a more favorable interest rate on rediscount facilities and longer-term usance letters of credit.
Bank Indonesia (the central bank) announced last month it cut the discount rate for special exporters to the level of Singapore Inter-bank Offered Rates (SIBOR) flat from SIBOR plus one point.
Bank Indonesia also allows banks that issue export drafts in U.S. dollars for importers to ask the central bank to pay them in U.S. dollars. The central bank normally rediscounts export drafts in rupiah.
In addition, the central bank extends its rediscount facilities to suppliers that supply goods to exporters which already get special status.
The rates for bank drafts issued by banks for suppliers are based on the central bank's three-month money market securities' cutoff rate plus or minus a set margin. The margin was set at minus 0.50 percent last month.
Eligible
Tunky said his office had listed 334 exporters which were eligible for the facilities, including the central bank's rediscount facilities. Most of the listed companies are textile exporters.
He explained companies filing for special status should not have bad debts or problems with customs and tax offices. Besides, they must have clear addresses and tax registration numbers.
"The government not only gives the certificates to producer exporters, but also to trader exporters," Tunky said.
Growth of the country's non-oil exports had slowed in recent years, while imports had increased rapidly.
Non-oil exports grew from US$27.1 billion in 1993 to $30.4 billion in 1994 and $34.9 billion in 1995. Non-oil imports rose from $26.2 billion in 1993 to $29.6 billion in 1994 and $37.7 billion in 1995.
Non-oil exports, however, had started to recover last year.
During the first 10 months of last year, Indonesia's total exports increased by 10.4 percent to $40.6 billion, consisting of $9.3 billion oil and gas exports and $31.2 billion non-oil exports.
Total imports increased by 5.1 percent to $31.9 billion, comprising $2.4 billion oil and gas imports and $29.4 billion for non-oil and gas imports.
Tunky said earlier exports of electronics, wood and rattan products performed well last year. For instance, textile exports, which fluctuated in the previous years, increased by 10.5 percent last year to $6.85 billion from $6.2 billion in 1995. (rid)