Simplified export procedures head reform package

Simplified export procedures head reform package

JAKARTA (JP): The deregulatory package announced by the
government yesterday includes the simplification of export and
investment procedures in addition to the reduction of import
tariffs on nearly 1,500 items.

The simplification of export procedures includes the increase
in the maximum value of export goods which are not required to
obtain export declaration documents (PEB) from Rp 10 million
(US$2,450) to Rp 100 million

Raising the maximum value for the shipment of goods without
PEB documents is expected to encourage non-oil exports by
cooperatives as well as by small and medium-sized companies.

The simplification also includes the elimination of pre-
shipment inspections on export goods.

The new deregulatory package also includes the simplification
of requirements and procedures to obtain the certificates of
origin (SKA) of Indonesian export goods. This facility includes
the reduction of the number of regulations on SKA from 31 to only
four and the reduction of the number of supporting documents to
complement the SKA from four -- Letter of Credit (L/C), PEB,
Invoice/Packing List, and Bill of Lading (B/L) or AW Bill -- to
only two, the PEB and B/L or AW Bill.

The government is also giving incentives in the form of
accelerated customs services and tax breaks as well as the
provision of banking facilities for export-oriented companies,
which meet such requirements as owning permanent addresses and
tax registration numbers in Indonesia, being good and obedient
taxpayers, never breaking customs laws and regulations and having
no debt problems.

The facility in the banking field as determined by Bank
Indonesia includes the expansion of banking services to Africa,
Eastern Europe and Latin America, in addition to the use of a
rediscount facility in accordance with the market rate and the
use of usance L/Cs for a maximum of two years.

The local L/C will also be rediscountable for a maximum of
three months beginning on Dec. 1, this year.

For a trial period, the facility will be given first to
textile and textile-related products, footwear, electronics,
finished wood and rattan products and leather goods.

Measures taken to improve the business climate include, among
other things, the simplification of regulations for companies
operating in industrial zones, the operation of bonded zones and
bonded warehouses by private companies, the dispensation of
import activities for foreign-investment manufacturing companies
and the simplification of procedures for the importation of waste
to be used as industrial raw materials.

Industrial companies located in industrial zones, for example,
are no longer obliged to possess permits related to the location
and construction of factories or those related to pollution and
other environmental matters as long as they have obtained
investment approvals from the Investment Coordinating Board.

In relation to the operation of bonded zones, the new
deregulatory package allows the use of bonded zones for
warehousing, processing, exhibiting and limited sales with
special treatment for customs, excise and taxation.

Opportunity

The deregulatory measure, in addition, gives private firms an
opportunity to operate bonded zones, which used to have to be
operated by state-owned companies.

Other than for processing areas, bonded zones, therefore, can
now function as warehousing facilities and their operations are
open to the private sector.

Basically, a bonded zone can be a bonded warehouse, an
entreport for exhibition or a duty free shop.

In order to push non-oil exports and to expand employment
opportunities, the government will also allow manufacturing
companies, with foreign investment (PMA) status, to import
complementary goods from their offshore affiliates. Such a
practice was previously prohibited.

In addition, companies in bonded zones are also allowed to
sell their own products on the domestic market up to the
wholesaler-level, a facility which was previously given only to
joint venture trading companies.

Manufacturing companies with a PMA status are also allowed to
sell imported complementary goods domestically.

According to the newly issued measures, the sale of imported
complementary goods by PMA-status companies on the domestic
market should, however, be made in the same package as the sale
of their own products. Furthermore, the value of such companies'
own-product exports should be higher than the value of the
imported complimentary goods.

The procedure for the importation of waste for industrial raw
materials will be also simplified, in addition to an adjustment
of the tariff codes of imported waste.

Yesterday's deregulatory package also provides the schedules
for tariff reductions stipulated in the deregulatory measures
introduced in May 1995.

The tariffs on the group of commodities targeted to have the a
maximum tariff of 5 percent in year 2000 will be reduced by 5
percent in 1997 and 1999, except for those goods whose tariffs
are already 5 percent.

The tariffs on the group of commodities targeted to achieve a
maximum of 10 percent in year 2000 will also be lowered by five
percent in 1996, 1998, 2000 and 2002, except for those already at
10 percent.

The following items are excluded from the tariff schedule
reduction: certain agricultural commodities, certain automotive
products, certain chemical products, and plastic and metal
products.

Tariffs on distilled alcohol products and alcoholic beverages
will not be lowered.

In the May 1995 deregulatory package, import tariffs and
surcharges were divided into two categories. Now the surcharges
are eliminated because their definition in the newly issued
Customs Law does not exist.

According to Minister of Finance Mar'ie Muhammad, the new
tariff reduction schedule covers 1,497 tariff codes out of the
existing 7,288 tariffs.

In addition, the newly issued deregulatory package also
simplifies import licenses, which among other things covers the
change in the import regulations on certain products in order to
smooth the procurement of capital goods and raw materials as well
as to increase the efficiency of the domestic industry.

The deregulatory package also sets guidelines on the
introduction of an anti-dumping measure to overcome possible
dumping practices from other countries and in order to protect
domestic industry.

An anti-dumping committee will be assigned to conduct research
to find out any dumping practices by exporters in other countries
or subsidized by their governments and to recommend an action
plan against such practices.

The committee is to be chaired by Minister of Industry and
Trade Tunky Ariwibowo, assisted by Mar'ie.

Tunky said that he will soon announce the other members of the
anti-dumping committee and issue its technical programs. (hen)