Shipping firms evade taxes for survival

JAKARTA (JP): Evading the payment of taxes and port billing fees through manipulation has become common among domestic shipping firms as their businesses continue to face increasing competition, especially from foreign companies since deregulation.

"There are many commercial shipping companies which manipulate financial affairs to evade tax payments and reduce payments for port services to keep themselves operating to get funds to repay debts," the chairman of the Indonesian National Ship-owners Association, Hartoto Hardikusumo, told Commission V of the House of Representatives here yesterday.

INSA groups 653 shipping companies, including those supporting the businesses of their holding firms, those owned by the government and those owned by private entities which provide passenger and freight transportation for the public.

Hartoto said that a government deregulatory measure introduced in November 1988 allows shipping companies to serve any routes by themselves and abolishes the flag requirement dispensation for foreign ships traveling in Indonesia, while domestic shipping companies which lease foreign ships are required only to report to the Directorate General of Sea Transportation.

He acknowledged that the regulation has raised the country's non-oil exports but also has affected domestic shipping firms.

He said that competition is getting unfair because foreign companies, which generally offer competitive freight fees, are allowed to enter 133 ports throughout the country to carry commodities, thereby reducing the opportunities of domestic shipping firms.

The situation often causes oversupply, while most of the domestic shipping firms operate conventional vessels, he said.

"I tell the legislators what really happens," he said.

He said that shipments of the country's exports and imports are dominated by foreign companies as the export commodities are usually sold with FOB (free-on-board) terms, while imports are based on a CIF (cost, insurance and freight) arrangements.

Hartoto said earlier that according to data from the Directorate General of Sea Transportation, the market for domestic shipping firms reached only 5.89 million cubic meters in 1991 and 8.02 million cubic meters in 1992, while foreign shipping companies gained 160.9 million cubic meters and 174.43 million cubic meters respectively.(icn)