Tariff protection will hurt exports: Executive

Tariff protection will hurt exports: Executive

JAKARTA (JP): Additional tariff protection for upstream
industries would hurt Indonesian plastic exports, which are
already threatened by escalating raw material prices, an
executive warned yesterday.

"More tariff protection for upstream industries will lessen
the competitiveness of our plastic goods," said A. Sarbini,
chairman of the Indonesian Plastic Manufacturers' Association.

Sarbini was referring to the possibility that the government
might soon give tariff protection to petrochemical products to be
manufactured by PT Chandra Asri Petrochemical Center at its
US$1.7 billion olefin plant in West Java.

The tariff controversy which raged last year resurfaced after
Chandra Asri executives urged the House of Representatives to
support their proposal that a duty of between 35 percent and 40
percent be imposed on imports of olefin products, including
ethylene and propylene.

Chandra Asri, which is partly controlled by the Bimantara
Group, plans to start production in the middle of this year.

Sarbini said that Indonesia's exports of plastic goods are
already threatened by rising raw materials prices.

"The prices of plastic raw materials, in the form of various
petrochemical compounds, have risen significantly over the last
two years -- by between 50 and 90 percent," he said.

Sarbini said that Indonesia's export earnings from plastic
goods were likely to decline during the 1994-1995 financial year.

The country's exports of plastics reached $205.43 million in
1992-93.

Tariff

The government's tariff team, comprised of several cabinet
ministers, has met with President Soeharto several times but, as
yet, no announcements have been made.

In December last year President Soeharto appointed
Coordinating Minister for Industry and Trade Hartarto to the
chair of the tariff team. Hartarto replaced Minister of Finance
Mar'ie Muhammad, an outspoken opponent of Chandra Asri's tariff
proposal. The December shakeup also saw the appointment to the
team of Minister of Investment Sanyoto Sastrowardoyo, an ardent
supporter of the Chandra Asri project, as well as Minister of
Agriculture Sjarifudin Baharsjah, Minister of Industry Tunky
Ariwibowo and Minister of Trade Satrio B. Joedono.

Sarbini said yesterday that under the existing system the
majority of downstream plastic producers are already forced to
purchase polypropylene resins, at a price higher than the
international price, from PT Tri Polyta Indonesia, an affiliate
of Chandra Asri.

"Only a minority of plastic goods manufacturers, which
generally export their products, can import polypropylene resin
without paying duties and surcharges," he said. (hdj)