Prijadi asked to impose tax on raw leather exports

JAKARTA (JP): Minister of Industry and Trade Luhut Panjaitan has proposed that Minister of Finance Prijadi Praptosuhardjo reimpose an export tax on raw leather in a bid to protect the country's ailing tanning industry.

In his letter, Luhut said the export tax on raw leather should be set at between 20 percent and 30 percent to ensure that the local tanning companies would receive adequate supplies of the raw material.

"Without the protection, it will be difficult to develop the tanning industry," the minister said in his recommendation letter.

The local tanning companies encountered difficulties after the Ministry of Finance removed the export tax on the raw leather in April 2000 to meet the economic reform agenda set by the International Monetary Fund (IMF) in return for its bailout funds.

Diyono Hening Sasmito, chairman of the association of the Indonesian leather tanning industry, said on Monday that the domestic supply of the raw leather worsened after several exporting countries such as India, Pakistan and Brazil limited their exports.

According to him, nearly half of the leather tanning companies in the country had closed their operations following the removal of the export tax.

Diyono added that, before the export tax was removed, the number of tanning companies exceeded 600, with a total production of 49,000 tons.

"At present, the number of the tanning companies are only 366, with a total production of 17,850 tons," he told The Jakarta Post.

Diyono said he had brought the complaint to members of the House of Representatives (DPR) and hoped the legislators would help solve their problem. (05)