Jakarta. The Indonesian government has waived import duties for salt for industrial purposes as of last month, an official said on Tuesday.
“The government sees that the import tax would burden domestic industry,” said Muhammad Khayam, the Industry Ministry’s director for basic chemical industries.
Under a previous regulation, salt imports were restricted by quotas, allowing only handful of business groups to control the market, while limiting domestic manufacturers in expanding production.
The Association of Indonesia Salt-Using Industries (APGI) estimated that a Rp 200 import duty on salt could increase production costs by 40 percent.
Imported salt sold directly to consumers will still be liable for import duties, Khayam said.
He added the government would monitor enforcement of the new regulation closely to ensure it was not exploited by importers reselling the commodity to the domestic consumer market.
Salt is a key ingredient in the production of basic chemicals such as caustic soda, which is essential in industries such as pulp and paper and textiles.
Most manufacturers prefer imported salt mined from underground reserves over the domestic variety, typically sun-dried sea salt, because of the higher water content and mineral contaminants in the latter.
The new waiver would benefit basic chemical manufacturers like Japanese-backed Asahimas Chemical, which announced in September that it planned to invest $885 million over the next few years to expand its production facilities in Indonesia.