To help bolster the competitiveness of domestic industries, the finance ministry has scrapped import duties on several raw materials for up to eleven industries, including shipbuilding and automotive components businesses.

In a statement issued late last Friday, the ministry announced that the policy could have generated slightly more than Rp 1 trillion (US$106 million) in state revenue in the last three months of the year.

"The incentive is given both to guarantee supply for domestic demand of consumer goods and to strengthen our real sector, in particular general and relevant industries," the ministry's head of public relations Samsuar Said said.

Raw materials exempted from duty include those that are not produced domestically, or in insufficient volume.

The eleven industries are: The airline, cruise, coal-fired power generator, shipbuilding, heavy equipment, automotive components, infuse, sorbitol, dairy processing, electronic components, and cold-rolled coil industries.

Samsuar said the industries were chosen because their products were widely consumed domestically and because they employed large numbers of workers.

The incentive is effective immediately and will be evaluated in three-months.

The ministry has also scrapped a 10-percent tax on luxury goods for electronic products, in particular certain types of televisions, laundry machines and cameras.

The policy applies to TVs smaller than 21 inches, washing machines with a capacity of between six and 10 kilograms of clothes and cameras priced below Rp 2 million.

"All others are still subject to the tax, as the prices are still not affordable for most middle class consumers in the country," Samsuar said.

Anggito Abimanyu, head of fiscal policy at the finance ministry, said the cut in luxury tax and import duties was aimed to "boost the real sector, reduce business costs."

This is also expected to limit imports of unimportant goods, he added. "If producers can purchase domestic goods, they'd better buy domestic goods."

Indonesian Chamber of Commerce and Industry vice chairman for manufacturing Rahmat Gobel said the business community appreciated the policies, which he said would help lower production costs and eventually selling prices.

"Production costs will be cheaper and the producers will be able to boost their production. This will also help us eradicate illegally imported products," he said.

Rahmat said he hoped the tax incentive would be extended to other widely used products in the country, such as air conditioning units and refrigerators.

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