Wiping Out of PPN May Boost Industry's Competitiveness
Thursday, 11 January, 2007 | 17:03 WIB

TEMPO Interactive, Jakarta: It is expected that the government's decision to wipe out the 10 percent value-added tax (PPN) on primary commodities in the domestic market will increase downstream industries such as cocoa and rubber.

Industry Minister Fahmi Idris has said that the wiping out of PPN may boost the competitiveness of downstream industries.

According to Fahmi, one of the weaknesses of national industries today is the difficulty in acquiring raw materials.

“Currently, we still have to import because of fiscal considerations and this causes a lack of competitiveness among downstream industries,” he said on Thursday (01/11).

He cited that it will be more competitive to buy raw materials from abroad than from the domestic market for chocolate products.

The reason for this was that domestic chocolate producers prefer exporting to supplying the domestic market.

“This because PPN is imposed on domestic trading whereas exporting is PPN free,” he said.

The policy to wipe out PPN, said Fahmi, was aimed at increasing downstream industries’ competitiveness as well as improving the quality of primary products.

The government previously imposed PPN of 10 percent on primary commodities that are traded on the domestic market.

The commodities included products from the agriculture, breeding, forestry, plantation, cultivation and fisheries sectors.

MUHAMAD FASABENI