Indonesian tea association presses for reassessment of import duty

The Jakarta Post ,  Jakarta   |  Tue, 04/08/2008 11:52 AM  |  Business

The Indonesian Tea Agribusiness Manufacturers Association has urged the trade and finance ministers to readjust the import duty on value-added tea products to levels equal to other tea producing countries.

The association argues, in a letter sent to the two ministers dated April 1, that the 5 percent import duty for extracted and concentrated tea products is too low, to the point of hurting sales of local producers.

"Our current import duty has made the trade of those particular items unfair for Indonesian producers," association member Alisjahbana Haliman said.

The regulators, the association says, need to review the policy as many other tea producing countries charge more than Indonesia.

According to data provided by the association, Kenya has a 25 percent import duty on products under HS code 2101.20, India has 30 percent, China 32 percent, Sri Lanka 48 percent and Vietnam 50 percent.

"Thus, Indonesian tea producers are not only incapable of competing in the international marketplace, but worse, they even face huge challenges sustaining the domestic market. If the government does not do something, the Indonesian tea industry could collapse," Haliman said.

"We urge the ministers to enforce the principle of fairness in this matter. We don't ask for protection, we ask for fairness."

Another association member, Wahyu Wibowo of natural ingredients producer PT Haldin, said that in 2007, when the amount of tea products imported from Kenya to Indonesia reached 1,590 tons (worth more than US$2.84 million/Rp 25.93 billion), Indonesia's tea exports to Kenya were only 4.8 tons, worth some $227,665.

"Our country is used to resolving its inability to increase the production of commodities by simply importing them while, actually, if the government put their efforts into improving Indonesia's commodity production, the trickle-down effect would be enjoyed by many," he said.

The tea plantation sector employs around 320,000 workers and supports more than 1.3 million people, the association says.

The sector also contributes Rp 1.2 trillion to Indonesia's gross domestic product and annual foreign exchange earnings of around $110 million. Downstream tea industries are worth around Rp 2.5 trillion annually and employ some 51,422 workers. (uwi)

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