Tanners ask for export tax on leathers

Tanners ask for export tax on leathers

Adianto P. Simamora, The Jakarta Post, Jakarta

The Indonesian Tanners Association has renewed calls for the
government to reimpose export tax on raw leather to ensure
sufficient supplies at home, noting that many local tanneries
have been closed or were facing bankruptcy due to limited
supplies of raw materials.

The association also urged the government to ease its rules
curbing raw leather imports.

"That's the only way for the government to ensure the
country's tanning and leather industry survives," association
chairman Diyono Hening Sasmito told The Jakarta Post on Thursday.

Data from the association indicates that the number of
tanneries have steadily decreased since the government removed
export tax on raw leather in 2000 to meet the economic reforms
set by the International Monetary Fund (IMF). In 1998, the export
tax stood at between 200 percent and 300 percent.

Today, there are 47 medium and big tanneries across the
country with a total production of 72.5 million feet per year, as
against 112 tanneries with a total annual output of 210 million
feet in 1998.

"We are almost dead. We now run at only 22 percent of our
capacity," Diyono said.

The removal of tax imports on raw leather had resulted in the
lack of raw materials on the local market. And the situation
worsened after exporting countries such as India, Pakistan and
Brazil limited their exports.

Aside those countries, Indonesia also imports raw leather from
Australia, Argentina, France, Germany and the United States.

To make matters worse, the Ministry of Agriculture's
Directorate General for Livestock Production issued a decree in
2001 banning the importation of raw leather, including wet
pickle, wet blue, crust and finished leather from several
countries for fear the commodities could bring foot-and-mouth
disease into the country.

"Tens of thousands of workers have been laid off following the
closure of hundreds of tanneries over the past several years,"
Diyono said.

He warned of thousands more layoffs this year unless the
government reimposed export tax on raw leather.

Tanneries' workers have declined from 12,560 in 1998 to 8,670
in 2000 and 5,620 in 2001.

The downturn in the country's leather industry will certainly
hurt the country's footwear industry, which employs millions of
workers and is one of the country's major contributors of foreign
exchange earnings.

The association said it had discussed the problems several
times with related officials at both the Ministry of Industry and
Trade and the Ministry of Agriculture.

In response to the hardship, Minister of Trade and Industry
Rini M.Soewandi recently sent a letter to Finance Minister
Boediono asking the ministry to set the export tax on raw leather
at between 20 and 30 percent.

The association together with some 23 associations on Monday
brought their complaints to members of the House of
Representatives of Commission V overseeing the trade and industry
affairs.