JAKARTA (TheInsiderStories) - Indonesia government has decided to omit value added tax (VAT) on agriculture products to boost export as part of equitable economy policy, said Industry Minister Airlangga Hartarto on Monday.
Minister Hartarto said besides easing the VAT, the government also aims to give discount incentive for procurement of equipment facility to small and medium enterprises (SMEs) as they also need production equipments.
Currently 11 products has zero VAT tax and the ministry has plan to expand the lift VAT on labor intensive industry for export oriented.
In addition, the government also provides investment allowance or fiscal facility that will allow companies to reinvest their funds. The tax allowance implementation is pending on the results of discussion with the finance ministry and other related ministries.
The government has also established facilities that can be used by export-oriented companies, where raw materials are pooled to make it easier for companies, including SMEs to get access to raw materials.
He cited the case of raw materials needed by shoe producers, garment factories, agriculture product producers, cosmetics, beverages, rubber and many others. The government will make it easier for these industries to get access to raw materials.
“In principle, we are going to integrate the industries, starting from raw materials, production phase, market and services. This (lifecycle) production process is important to develop our industry going forward,” Airlangga Hartarto said.
Directorate General for Agro-industry of Industy Minister Panggah Susanto said that he expects all primary products will not be imposed with VAT as this makes primary products to be less competitive. “All primary products should not be imposed by VAT,” Panggah said.
Panggah added that going forward the government plans to develop an integrated agriculture product lifecycle, from raw products until processed agriculture products.
The other option is developing partnership program between farmers and factories. This can be done in sugar production, milk and husbandry industry. (*)