Posted by: mel | January 8, 2010

Indonesian Duty Revenue Plunges as China FTA Takes Effect

Jakarta Globe | Dion Bisara | 8 January 2010

Import-duty receipts dropped by almost half during the first seven days of this year compared with the same period a year ago, providing the first evidence of the impact of the Asean-China Free Trade Agreement.

Data released by the Indonesian Customs Office on Friday showed that in the first seven days of 2010 the directorate general of customs and excise at the Finance Ministry collected Rp 136.65 billion ($14.9 million) in import-duty receipts, down 48.3 percent from Rp 264.42 billion in the same period last year.

“Please bear in mind that this is very raw data,” customs spokesman Evy Suhartantyo said.

Seven days was a limited time to measure import duties because the figure could be affected by holidays and other one-off events, Evy said.

Last month, Edy Putra Irawady, a deputy to the coordinating minister for the economy, said the FTA would result in the country potentially losing about Rp 350 billion in import-duty revenue a year.

The government has set an import-duty revenue target of Rp 16.57 trillion this year, down slightly from last year’s Rp 16.92 trillion. An expected increase in economic growth, forecast at 5.5 percent this year, and growing trade volumes are expected to offset falling revenue on Chinese imports.

China is Indonesia’s eighth-largest trading partner of non-oil and gas products, according to October 2009 data from the Central Statistics Agency (BPS).

Edy said he expected an increase in the volume of garments, toys, electronics and other types of goods imported from China in the first five months of the year.

“I do not expect imports to start flooding in right after the start [of the agreement]” because different products are imported at different times, he said.

Edy said he was confident the government could prevent illegal low-quality imports from China because the government had “tightened the borders, disciplined unregistered traders and imposed stricter requirements on products.”

The government is requiring that Chinese imports arrive only at specially designated ports, with every container inspected upon arrival.

Customs officers now carefully checked whether imported products met Indonesian-language labeling requirements, and had not exceeded their use-by dates, Edy said.

Many domestic manufacturers are opposed to the FTA, arguing that an influx of cheap Chinese imports will be their death knell.

On Monday, the government asked the Asean Council to renegotiate tariff reductions on 228 categories of goods across eight industrial sectors.

However, Trade Minister Mari Elka Pangestu pointed out this week that domestic businesses could benefit from the trade pact.

Indonesian exporters would benefit from lower prices for raw materials sourced from China, she noted.

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