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.