Rini wants taxes on cocoa dropped

Rini wants taxes on cocoa dropped

Adianto P . Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini Soewandi said on Wednesday
that she had asked the finance ministry to scrap the existing 10
percent value added tax (VAT) and a 2.5 percent income tax (PPN)
imposed on the trading of the country's cocoa beans to local
manufacturers.

She said that the move was aimed at increasing the sales of
the commodity here.

"I have already asked the Minister of Finance to scrap the
taxes on cocoa beans ...," Rini told the House of Representatives
Commission V, overseeing industry and trade affairs.

"We are also considering whether to impose an export tax on
cocoa beans to limit exports of the commodity," she said.

She said that the government wanted local processors to buy
more of the local cocoa output to generate more "added value."

Processors grind down cocoa beans into butter and powder.
Cocoa powder is used for all types of chocolate products.

Rini said that local processors had a grinding capacity of
about 200,000 tons per year, but only half of that capacity was
being utilized now due to the high taxes which limited demand
from local companies for the cocoa beans.

According to Rini, local traders preferred exporting cocoa
beans rather than processing it into powder or butter products
due to high taxes.

Rini said that the price of cocoa powder or butter was about
US$4.5 per kilogram, compared to cocoa beans at only $1.7 per
kilogram.

Malaysia, said Rini, was currently running all its installed
grinding capacity of 120,000 tons per year with cocoa output
volume at only around 60,000 tons.

"They import the beans from Indonesia to allow its installed
capacity running at 120,000 tons," she said.

The price of cocoa hit a thirteen-year high of Rp 17,000 per
kilogram on Monday amid lingering fears of lower output from the
world's largest producers and higher global demand.

Indonesia, the world's second largest cocoa producer after the
Ivory Coast, is expected to produce some 400,000 ton of cocoa
this year. Most of its cocoa beans are exported to the United
States, Singapore, Malaysia and Brazil.

The total land area used in the cultivation of cocoa is
estimated at 700,000 hectares, with some 350,000 growers
involved.

The Indonesian Cocoa Association (Askindo) have repeatedly
called on the government to eliminate the taxes, saying it would
only burden the country's processing industry and farmers.