Govt lifts import duty, coal export tax

The Jakarta Post, Jakarta

To attract investors to put their money in the country's vast energy resources, the Finance Ministry has lifted import duties on goods and equipment for oil and gas exploration and production as well as export tax on coal products.

The import duty exemption for equipment and goods used in the oil and gas upstream sector is given to oil and gas companies that operate under production sharing contracts with BP Migas, the regulatory body for oil and gas exploration and production, the Finance Ministry announced last week.

The equipment and products exempted from import duties include those used for drilling and production, transportation, power generation as well as workshop equipment, electrical tools, valves and fitting tools, building materials, metal, hardware and packing equipment, paints, oils, chemicals and laboratory equipment, medical equipment and supplies, household and office appliances.

The exemption came into effect on Oct. 16, 2006 and will be valid until July 15, 2007.

Related companies wishing to take the advantage of the import tax exemption should report their import plans for at least for a year to the office of the director general of excise and customs.

In addition to the abolition of the import duty, the Finance Ministry also removed the 5 percent tax imposed on coal exports which was introduced several years ago to protect the coal supply at home.

The new policy came into affect on Sept. 13.

Separately, a business watchdog has urged the Trade Ministry to also lift a policy prohibiting state-owned fertilizer companies from exporting their products because the ban will only cause great losses to the state.

"We have an over supply of fertilizer in storage. The domestic demand is only 400,000 tons, whereas our current fertilizer stocks have reached 800,000 tons," State-owned companies (BUMN) watchdog head Naldy Nazar was quoted by Antara News agency as saying.

Due to a slowdown in farming activities in the country, Naldy said the demand for fertilizers was declining, with warehouses overflowing with fertilizer.

He reiterated that the only way out was by lifting the export ban.

With the current oversupply, Naldy said that the ban was not relevant anymore as its purpose was to protect the country from a fertilizer shortage.

The Agriculture Ministry has forecast annual national production of fertilizer at about 7 million tons, which is more than enough to meet the domestic fertilizer demand of 4.5 million tons a year.(09)
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