Indonesia plans to raise export taxes on raw materials
The Indonesian government plans to re-impose export duties on raw hides in order to ensure sufficient supplies reach the local market.
According to the director of agricultural and mining product exports at the Ministry of Industry and Trade, Ferry Yahya, the export duties would be set at between 20% and 25 % from the current rate of 0%. The proposed move is dependent upon a ministerial decree, although Mr Yahya revealed that Minister of Finance Boediono had agreed in principle.
Pressure to re-impose export duties has come from the Indonesian Tanners' Association and the Indonesian Footwear Association. Both claimed the zero duty policy applied by the government to hides and skins had resulted in supply shortages on the local market and had damaged their businesses.
They also called on the government to relax the rules relating to the import of raw materials. Amid fears that imports could bring foot-and-mouth disease into the country, the government moved to impose tighter restrictions on the importation of the commodity.
Due to the lack of raw materials the number of local tanneries has continued to decrease. Data from industry associations showed that there are now only 47 mid-sized and large tanneries across the country compared to 112 in 1998. Currently, total output is 72.5 million feet per year compared to 210 million feet in 1998.The lack of raw leather supplies had also hurt the country's footwear industry, which employs millions of workers.
