Rubber council opposes export tax plan

Tue, 01/24/2012 - 07:30

The Indonesian Rubber Council has opposed a proposal from the Ministry of Industry to impose export tax on natural rubber products in a bid to push the development of rubber downstream industry in the country.

Council Chairman Azis Pane said that the export tax would only undermine the income of farmers, who account for about 97 percent of total production, as exporters or traders would shift the extra cost burden to them.

Suharto Honggokusumo, an expert at the council, warned that the export tax would only trigger smuggling problems.  

During a cabinet meeting late in December 2011, the Ministry of Industry proposed an export tax for natural rubber products as part of efforts to promote the development of domestic downstream rubber industry.  The ministry hopes that the success with cocoa export tax in pushing the development of domestic downstream cocoa industry could be replicated in the rubber sector.

Deddy Saleh, Director General of International Trade at the Ministry of Trade, said that the imposition of the export tax on natural rubber may not necessarily promote the development of the downstream industry such as tire as it requires huge investment.

He added that currently, the domestic industry is not suffering from shortage of rubber raw material.  “It must be thoroughly assessed, whether the export tax on rubber is the right strategy,” he said. (rei)

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