PT Chandra Asri must be transparent first: Tunky
JAKARTA (JP): Industry Minister Tunky Ariwibowo said yesterday that any infant upstream industrial plant asking for the government's protection must be transparent to the government, especially on their funding structure and production costs.
Tunky said in a session with the House of Representatives' Commission on Energy, Mining and Manufacturing yesterday that he is still collecting data on the olefin plant of PT Chandra Asri Petrochemical Center which is asking for tariff protection from the government.
He explained he had held a meeting on Dec. 10 with Peter F. Gontha of Chandra Asri.
"Gontha gave us his commitment to supply all the information we need. And last night we finished writing 13 pages of questions to be sent to the company. All the data we get will be submitted to the tariff team for further evaluation," Tunky said.
The tariff team is chaired by the Minister of Finance Mar'ie Muhammad and its members include Tunky and Minister of Trade Satrio B. Joedono.
Tunky noted that the government will support the development of upstream industries to strengthen Indonesia's industrial structure and assured that any form of government support should not hurt downstream industries and the end consumers.
"That's why we have to analyze it carefully before we can say 'yes' or 'no' to Chandra Asri's request," the minister said, adding that the Ministry of Industry has never promised the company any tariff protection.
In a hearing with the same commission earlier this month, Gontha asked the government to impose a duty of between 35 percent and 40 percent on imports of ethylene and propylene, two of the olefin products to be manufactured by his company.
Gontha argued that the imposition of higher tariffs on olefin products will affect the prices of downstream products but said that the "impact will be little."
Following Gontha's statement, mixed reactions were given by a number of government officials. Minister Mar'ie, for instance, ruled out the possibility of imposing import tariffs higher than those written on the official tariffs book.
Defended
However, speaking before the same commission on Monday, State Minister of Investment Sanyoto Sastrowardoyo defended Chandra Asri, saying that the company deserves the government's support because in the long run it will strengthen the structure of the country's industries.
Sanyoto, also the chairman of the Investment Coordinating Board, contended that the protection would enable Indonesia to save a huge amount of foreign exchange as local producers would no longer import such products to feed their chemical plants.
At present, Indonesia imports $1.9 billion of chemical products a year to feed some 10 intermediate chemical industries and more than 1,200 downstream industries.
In addition, he said, the operation of upstream chemical industries will give added value to the country's oil industries, which produce basic materials for petrochemical industries.
Chandra Asri's plant, constructed in Cilegon, West Java, with investments of US$1.6 billion and controlled by the Barito Pacific, Napan and Bimantara groups, is projected to start its trial production next year.
It will manufacture ethylene and propylene, the intermediate petrochemicals used to make polyethylene and polypropylene, the raw materials for the production of plastics, synthetic fiber, tires, pesticides, synthetic rubber, housewares and detergent. (rid)