“The government has already provided tax waivers for materials for export-oriented goods [KITE]. Why can’t it also create similar incentives for locally sourced raw materials? So domestic supply chains can be integrated,” said Indonesian Textile Association (API) chairman Ade Sudrajat Usman at the Presidential Palace on Monday.

At present, only imported raw materials that will be used for export-oriented textile products are exempted from import duties and valued added tax (VAT).

Under the current situation, producers who use imported raw materials are exempted from VAT, while producers that use local raw materials have to pay VAT upfront, despite being able to apply for a tax refund later on, Indonesian Association of Synthetic Fiber Producers (APSYFI) executive member Prama Yudha Amdan said separately.

“One of our proposals is that both imported and locally sourced raw materials be exempted from VAT payment,” said Prama.

Industry Minister Airlangga Hartarto said separately that the government was studying the businesses’ suggestion to exempt imported cotton from VAT, considering it was used as a raw material.

The meeting was held against the backdrop of increasing pressure from imported textile products, which has forced the closure of nine factories and the lay-off of at least 2,000 workers, according to API data.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia