Government Urged to Cut Export Tax on Tea
The Jakarta Post, page 13, 2005-07-20
PT Perkebunan Nusantara (PTPN) VIII, which controls 90% of Indonesia’s tea plantations, is urging the government to cut the 30% export duty on tea because its implementation harms the country’s competitiveness in the world market. It is difficult for Indonesia to compete because other countries, such as Sri Lanka, Kenya and India, have a maximum export tax of 5%. Hence, other countries present better prices in the world market. Tea manufacturers can only sell their tea for 90 US cents to US$ 1.10 per kilogram before taxes, when it should be US$ 1.30 to US$ 1.40 per kilogram. However, PT Unilever Indonesia, a major tea buyer in Indonesia, claimed that the low price is influenced by low quality of Indonesian tea due to the country’s inappropriate climate and geography and lack of investment. Indonesia needs to decrease production and focus on quality in order to increase competitivess value.