Indonesia shipbuilders welcome government plan to scrap VAT for shipbuilding

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JAKARTA (rambuenergy.com) – Shipbuilding industry players welcome the government’s plan to scrap the value added tax imposed on shipbuilding industry players in a move to stimulate domestic shipbuilding industry.

The Head of the Indonesia Shipbuilding and Offshore Association (IPPERINDO) Eddy Kurniawan Logam expects the scrapping of the VAT, the price of vessel components would decline. So far, the purchase of vessel components is slapped with value added tax (VAT) of 10 percent.

“This is a positive move,” Eddy Logam was quoted by Kontan daily as saying. He is confident that the move would push down vessel prices and encourage domestic vessel industry to grow.

He said around 60 percent of costs in building a new vessel is allocated to buy components and materials, 20-30 percent is to pay workers, therefore shipbuilders could still have profit margin of 10-20 percent. The scrapping of VAT would also make domestically made vessel prices to be competitive with imported vessels.

Industry players are now waiting for realization of the government plan to scrap the VAT. (*)