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)