Reconfiguration of Policies for Bonded Zone Goods’ Entry

The government offers various incentives and facilities for companies in bonded zones, including the suspension of import duties, exemption from Value Added Tax (VAT), Luxury Goods Sales Tax (PPnBM), and Income Tax Article 22 on imports of capital goods or equipment.

Tim Redaksi

4 Nov 2023 - 21.12
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Reconfiguration of Policies for Bonded Zone Goods’ Entry

Archipelago Bonded Area (KBN). /kbn.co.id

Bisnis, JAKARTA – The Ministry of Industry is planning to revise its policies to permit goods manufactured in bonded zones, which are originally intended for export, to also enter the domestic market. This adjustment is being considered due to a weakening demand in the global export market.

Minister of Industry Agus Gumiwang Kartasasmita explained that bonded zones, which have been granted various government incentives, were initially focused on catering to international market demands and were not allowed to sell their goods in the domestic market. 

“However, given the current challenges in the export market, we are currently reevaluating these policies to provide more flexibility for bonded companies,” he stated, Friday (3/11).

The government's facilities for companies in bonded zones include the suspension of import duties, exemption of VAT, PPnBM, and Income Tax Article 22 on imports of capital goods or equipment. 

However, the challenges in the export market, leading to unstable growth for companies in bonded zones and potential job losses, have prompted the government to take action.

In response to these challenges, Ministry of Finance introduced PMK 131/2018 to provide certain relaxations. One of these them is related to licensing for the release of goods manufactured in bonded zones to the domestic market, allowing companies to sell a maximum of 50 percent of the total value of their exports and sales to various regions. 

“Certainly, 50 percent is contingent on their discontinuation of the benefits and incentives,” he explained.

Minister of Industry (Menperin) Agus Gumiwang Kartasasmita - Doc. Ministry of Industry.

After five years, this condition actually led to other issues due to the influx of imported goods in the domestic market. That's why the Ministry of Industry is currently in the process of revising its policy regarding bonded zones, which is expected to be released next week.

Under the new policy, goods from bonded zones will no longer be restricted to a 50 percent limit when entering the domestic market. Companies in these areas will have the flexibility to produce goods exceeding the 50 percent threshold, but such decisions will be carefully considered by the Ministry of Industry.

"The Ministry of Industry will exercise caution in granting permission for more than 50 percent of bonded zone goods to enter the domestic market. We aim to reach a harmonized agreement on this matter in the upcoming Minister of Industry Regulation, which is expected to be issued next week,”

The forthcoming regulation will outline the criteria for recommending the local sale of goods from bonded areas exceeding 50 percent. Agus emphasized that ensuring fairness in the market for both bonded and non-bonded areas is of utmost importance.

To achieve this, the ministry will heavily rely on the implementation of commodity balance assessments to monitor domestic supply and demand. The Ministry of Industry is committed to prioritizing the interests of non-bonded area industries. 

“We want to avoid a situation where, in an effort to support companies in bonded areas due to a weak export market, the challenges are transferred to non-bonded companies,” he affirmed. 

In the case of bonded zone companies granted recommendations to sell more than 50 percent of their goods in the domestic market, their status as bonded zone companies will be revoked.

“We need a level playing field, where both companies within and outside bonded areas face similar challenges. Businesses outside bonded areas are also engaged in export activities and are equally affected by the weakening global market conditions,” Agus concluded. (Afiffah Rahmah Nurdifa)

 

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