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Indonesia: Exporters told to take advantage of trade facilityWednesday, August 13, 2014 > 08:46:58
The government expects Indonesian exporters to seize full benefits of the Certificate of Origin (C/O) in a bid to boost their competitive edge in the global market.
A C/O traces the country of origin of imported and exported goods, and helps identify which ones are eligible to obtain preferences that may include the reduction or exemption of import duties, ease in the quarantine process and simplified custom procedures.
In the majority of agreements between Indonesia and its trading partners, goods that are produced using local materials of between 35 percent and 40 percent of whole ingredients, are classified as Indonesian-made products, thereby qualifying for special treatment.
Up until now, only a few Indonesian products shipped overseas use the facility, covering only one-fifth of 7,000 tariff lines of goods delivered overseas, according to Deputy Trade Minister Bayu Krisnamurthi.
“The low utilization of this facility is one of the reasons why our trade agreements seem less beneficial for our business players,” Bayu said on Friday.
In past years, concerns have emerged surrounding any negotiations as well as implementation of free trade agreements (FTAs), as business players often complain that such deals do not bring significant advantages to them.
The rage around the implementation of an ASEAN-China FTA, which is accused of causing an influx of imports instead of promoting exports, is an example that reflects such concerns.
Indonesian Exporters Association (GPEI) secretary-general Toto Dirgantoro said on Sunday that the low-utilization rate of the rules of origin could be attributed to several factors, including lengthy procedures to process the certificates of origin and lack of knowledge about the benefits.
“Despite minor costs incurred from the application of the certificates, exporters spend more on other costs, such as operational and service costs,” he told The Jakarta Post in a text message.
Toto also said that lack of knowledge about the facility could also be due to the fact that many exporters handed over works pertaining to the delivery of their products to customs service firms and forwarders.
Despite its still low-utilization rate, exports that get tariff preference have surged over the years, statistics from the Trade Ministry show.
Exported goods that are subject to duty cuts totaled 77 percent of overall exports in 2012 and the figure rose to 83 percent last year.
From 2012 to the January-July period this year, import duty reductions have mostly been given to footwear, non-woven goods, lamps, apparel and wood products.
In the same period, the widest range of goods that access the preferential tariff are shipped to the US, followed by Japan, China and Germany.