Ministry of Trade sees export tax on rubber not feasible

Fri, 02/10/2012 - 09:58

Director General of International Trade at the Ministry of Trade, Deddy Saleh said that a proposal from the Ministry of Industry to apply export tax on rubber to help push for the development of downstream industries is not feasible.

He said that applying export tax would cause huge burden for smallholder farmers, which hold more than 95 percent of the rubber plantation in the country, and will not necessarily speed up the development of downstream industries as local crumb rubber producers have already established long-term contract with overseas buyers.

Deddy Thursday said that the only positive thing in the application of the export tax is higher revenue for the government, albeit huge burden for the farmers.

The Ministry of Industry proposed the export tax plan on December 23-24, 2011 during a cabinet retreat meeting.

Suharto Honggokusumo, Executive Director of the Indonesian Rubber Producers Association (Gapkindo), gave similar opinion, saying that the export tax would only burden farmers, who not pass the cost to consumers in the form of higher price as it would make the local output to be less competitive in the international market.

He added that lack of intermediate industries such as chemical in the country, would make it difficult to push for the development of the downstream rubber industries.  He cited as an example that natural rubber only accounts for 50-60 percent of the components in the production of tires. (rei) 

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