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Mixed Reaction To Indonesia's New Import Duty

by Mary Swire, Tax-News.com, Hong Kong

05 June 2009

The introduction of a new import duty on raw materials for milk powder production in Indonesia has prompted a mixed reaction from the country's dairy industry.

After much pressure from local farmers who have struggled during the onset of the global financial crisis, the government agreed on May 29 to increase the import tariff levied on milk products from 0 to 5%. The measure officially took effect on June 1.

The move has been welcomed by dairy farmers, who believe it will not only increase their ability to compete with global markets, but also raise consumption by boosting supplies to the local milk market.

However, objection to the measure has been lodged by several of the country's dairy processing companies, who argue that the duty rise will inevitably raise production prices which cannot be offset against selling prices in the current market.

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