GOVT CALLED ON TO SCRAP VALUE ADDED TAX ON RATTAN PRODUCTS

Jakarta, Jan 30 (ANTARA) - Furniture industries called on the government to scrap the value added tax (PPN) on semi-finished rattan products in an effort to help local handicraftsmen increase their competitive edge in the face of the impact of the global economic crisis.

"The 10 percent value added tax on rattan products hamper the growth of the rattan industry. I hope the government would lift the PPN on semi-finished rattan products in order to help the rattan industry survive," General Chairman of the Indonesian Handicraft and Furniture Industries Association (Asmindo), Ambar Tjahjono said here on Thursday.
Speaking to a press conference on the sidelines of an International Furniture and Craft Fair Indonesia (IFFINA), Tjahjono said that rattan craft industry badly needed a stimulus whose impact could be felt soon in the current economic crisis.
"The realization of the government's design on rattan industrial development cluster needs 10 years. We therefore need a stimulus which could give impact soon. We need the abolition of the PPN in the first place," Tjahjono said.
He said that furniture industries needed a serious attention from the government as they constituted labor-intensive industries which employed 11 million people. In 2008, their exports accounted for 1.7 billion dollars of the country's total exports.
Besides scrapping the value added tax, the government should also help industries relocate their export destinations from traditional markets such the United States, Europe and Japan to new potential destinations such as Russia and the Middle East countries, he said.
Tjahjono said that industry players also needed cheap credits with lower banks interest rates at a range of 6-7 percent so that their exports could survive in the current economic slow-down.
"In the January-February period, exports drop by about 30 percent. So, the exports should be raised again in March," he added.
Indonesia's furniture exports only accounted for 2 - 3 percent of the world's total exports. Its markets included the United States, West Europe, Germany, the Netherlands, France, Belgium and Japan.