The Jakarta Post, Jakarta | Mon, 06/11/2012 8:42 AM
After recording a negative trade balance, due to weakening global demand, Indonesian exports are likely to take another beating as commodity exporters struggle to deal with the stricter trade regulation that has been in place since May 6, stakeholders say.
The Indonesian Chamber of Commerce and Industry (Kadin) says that Ministerial Decree No. 7/2012 has become a considerable stumbling block for mining activities as companies have had to apply for the so-called clean and clear status in order to be able to obtain a specific export permit and pay a 20 percent export tax.
The regulation applies to the export of 65 mineral commodities, excluding coal.
“The regulation’s implementation is a mess,” said Kadin vice chairman for trade, distribution and logistics, Natsir Mansyur, last week.
Natsir said that the procedures on how to obtain the clean and clear status constantly changed, as did those on obtaining export permits. Such a dilemma, he said, was coupled with the enormous undertaking of getting approval from regional governments in order to be able to get the clear and clean status.
Minerals accounted for 16.94 percent of Indonesian non-oil-and-gas export value in 2011.
In the first quarter of this year, the export value of mineral products rose 19.24 percent to US$2.59 million, but then plunged in April by 6.94 percent to $2.41 million, according to the Central Statistics Agency (BPS).
The BPS reported last week that Indonesia’s trade balance plunged into the red in April for the first time in nearly two years due to an unexpected drop in exports.
The agency said that the nation’s trade deficit was $641.1 million in April after it recorded a surplus of $920 million in January, $692.8 million in February and $840 million in March.
“[Since the implementation of the new trade rules], mining companies have lost about Rp 1 trillion ($107 million) in revenues. When will this stagnancy end? Ramadhan is approaching and companies need to prepare wages,” he said, referring to the Islamic holy month, in which companies pay out traditional annual bonuses.
Ina Primiana, a member of the Institute for Economic Study, Research and Development (LP3ES) said that regulation inconsistency, including the export tax regulation, had caused greater damage to the nation’s trade than the lingering eurozone crisis.
“Time and time again, policy instability has hobbled domestic industry. It also makes foreign investors think twice about entering Indonesia, afraid that changes in regulations will affect their business here,” she said, adding that according to the World Economic Forum, policy instability ranked as the fourth most problematic factor in a nation’s economy.
Ina said that Indonesia was the only ASEAN country that suffered a trade deficit with China under the ASEAN-China Free Trade Area (ACFTA).
“This indicates that there is something wrong with us. Besides policy instability, the deficit was caused by the government’s late moves on protecting domestic industry and low import taxes,” she said.
Indonesia imposes on average 6.6 percent import taxes, lower than major exporter countries, such as South Korea (12.1 percent); Brazil (13.7 percent); China (9.1 percent) and India (13 percent).
To revive the nation’s trade, Ina suggested the government revive domestic industries, curb import growth and expand export markets, particularly into non-traditional markets in Asia, Africa and South America.
Indonesia’s exports are oriented toward 13 countries, including China, Japan and the United States, which make up around 70 percent of total exports.
However, the global economic turmoil that has affected those traditional destinations has put pressure on Indonesia’s exports. (yps)
http://www.thejakartapost.com/news/2012/06/11/implementation-new-mineral-export-rule-a-mess-kadin.html
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