Indonesia govt mulls scrapping of duties and VAT on imported vessels components

JAKARTA ( – The Indonesian Industry Ministry mulls a plan to scrap import tax and value added tax on imported vessel components in order to spur the growth of domestic shipbuilders. The move was in response to the demand of shipbuilders demand.

Director General for Metal, Machinery, Transportation equipment and Electronics at the Industry Ministry I Gusti Putu Suryawiryawan said his office will process the demand although it may take time. He said so far the industry ministry has provided imported duties that are shouldered by the government (BMDTP).

“However, industry players (shipbuilders) said the BMDTP facility is not effective and it takes time to obtain the facility. Therefore, they demand scrapping of the import duty all together, just like schemes provided to industrial zones in Batam,” Putu said last week, as reported by Investor Daily.

Putu said the Industry Ministry will submit the proposal to the Coordinating Ministry for the Economy and Finance Ministry to seek such fiscal incentives. “The demand of shipbuilders are difficult to gauge. BMDTP actually is an effective instrument. Therefore, the shipbuilders should utilize the BMDTP scheme first because scrapping of import duty and value added tax will take time,” he said.

The industry ministry targets the shipbuilding industry to grow by 5.5-65 this year, or relatively equals to the nation’s economic growth.

Meanwhile, the Head of Shipping Industry and Offshore Companies (Iperindo) Eddy Kurniawan said the national shipbuilding industry is targeting utilization of 60-70 percent. To maintain the utilization level, the industry is hoping to get sustainable demand. Therefore they hopes to secure shipbuilding order from the government and state owned companies as well as oil and gas production sharing contractors (PSCs).

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