Humpuss refrains from seeking protective tariff

Humpuss refrains from seeking protective tariff

JAKARTA (JP): The Humpuss Group, which is now constructing a
major plant to produce methanol in East Kalimantan, promised over
the weekend not to ask the government to introduce a protective
tariff on the importation of the chemical.

"We will never ask the government to impose a protective
tariff because the domestic demand for methanol is still far
above the country's production," an executive of the group, Abdul
Aziz Bahalwan, was reported by Antara on Saturday as saying in
Probolinggo, East Java.

PT Kaltim Methanol Industri, a subsidiary of the Humpuss
Group, has assigned Lurgi Oil-Gas-Chemie GmbH of Germany to
construct a methanol plant worth US$330 million in Bontang, East
Kalimantan, with an annual capacity of 660,000 tons. The plant,
to be the country's second methanol factory after the first one
established by the state oil company Pertamina, is expected to
start operating in early 1997.

Bahalwan said Indonesia still largely depends on the
importation of methanol, a chemical substance needed for the
production of plywood glue, from Saudi Arabia and Malaysia.

According to the Ministry of Industry, Indonesia's demand for
methanol is estimated at 460,000 tons per year, while the supply
from Pertamina is less than 330,000 tons, the designed production
capacity of its methanol plant in East Kalimantan.

Import

Bahalwan said that Humpuss Group, which has been assigned by
the government as sole distributor of methanol on the domestic
market, imports about 20,000 to 30,000 tons of methanol to meet
domestic demand.

He acknowledged that the Humpuss Group, as the first private
sector entity to produce methanol, actually has the right to ask
for tariff protection from the government.

"But we will never ask for such protection in spite of tight
competition on the world market," he said.

The government has since November 1994 lowered the import duty
on methanol from 10 percent to five percent to help maintain the
competitiveness of Indonesia's plywood exports.

Bahalwan said that the sale of methanol on the world market is
monopolized by Methanec, a multinational company.

Kaltim Methanol plans to export 60 percent of its production
and sell the remaining 40 percent domestically. It is financing
80 percent of the costs for its methanol project with offshore
loans from IKB Deutsche Industriebank AG of Germany and Nissho
Iwai Corporation of Japan and the remaining 20 percent with its
own equity.(riz)