Government to set up tax incentives to empower food sector

Kamis, 09 Februari 2012 | 09:57

The government can waive several taxes for food industry to promote diversification and development in rural areas, aiming to reduce imports of 10 main foods.Minister of Trade Gita Wirjawan supports the removal of some taxes including value added tax and income tax for food products.

“I support for tax-free corn. There must be a fiscal policy to make food diversification program done,” he said Tuesday when speaking in a seminar titled Jakarta Food Security Summit: Feed Indonesia Feed The World 2012.

However, he admitted that fiscal policy discussion usually ends up with though talks with Finance Ministry.

Minister of Industry M. S. Hidayat said that the government promises to give fiscal incentive and other facilities for investors in food industry, mainly in rural areas.

Concerning food industry, the government is developing an area in Merauke, Papua that is focused in producing food. However, the project, dubbed as Food Estate, needs big investment and the government must attract investors to put fund in the area.

“The problem is in infrastructure. So, we must give facility to investors,” Hidayat said.

The Minister has proposed to give tax holiday for 10 years for investment in food industry in Merauke. Moreover, it is proposed that the would-be investors can manage the public facility they build, such as ports and roads.

“After a few years, the government can take over. Investors and the government must sit together in calculating their investment,” he added.

The project located outside Java is a part of the government plan in encouraging the industry of processing natural resources. “The government wants 60% of Indonesian exports in the form of processed goods in the next 10 years, not raw commodity as we have now,” he said.

Indonesia has been importing 10 primary foods, so alternative strategy including food diversification is needed to reduce dependency on foreign supply.

“There are two ways to reduce imports. First, increasing domestic supply. Second, reducing domestic demand,” he explained.

Gita said that there are several state-owned and private companies attracted in developing the food estate in Merauke including Sinar Mas Group and Rajawali Group.

Meanwhile, rice consumption in Indonesia is considered high. An Indonesian person in average consumes 140 kg rice a year, doubling that of people from other Southeast Asian countries.

Food diversification must be encouraged to reduce dependency on rice, said Franciscus Welirang, who presides an association of Indonesia flour producers (Aptindo).

If there is no supply of certain food at home and the production cost is too high, import will be one solution to meet the domestic demand.

Another solution to encourage domestic production is by giving incentive for food industry. The association wants the government to waive VAT 10% for processed cassava (mocaf). “Chamber of Commerce has asked the government to waive 10% VAT from mocaf, so the industry can grow.”

Moreover, there are problems in supply and distribution of cassava flour. The incentive in the food industry will also support food diversification.

Krisis politik

In the meantime, demand for flour keeps rising. In 2011, demand for flour grew 8% compared to the earlier year. Demand for unprocessed wheat is also predicted to rise 8% this year.

“In 2011, demand for flour was equivalent 6 million ton of consumed wheat.”

Moreover, food industry is facing complicated challenges now, said Chairperson of Indonesian Chamber of Commerce Suryo Bambang Sulisto. He mentioned those challenges include unpredictable weather, energy crisis, political crisis, financial and economic crisis, and environmental damage.

“Food crisis is happening now and will continue not only in poor countries but also in developed economies, including Asia and Europe. Food supplies from emerging countries to developed countries have been declining,” he said.

At the same time, developed countries cannot meet demand for food because lack of land and uncertain climate.

He predicted that in 2045 when global population reaches 9 million people, food production must be enlarged by 70% to feed the people.

President Susilo Bambang Yudhoyono asked for development in food technology to strengthen national food security.

“Smart solution in food production and productivity is not always opening new lands for agriculture that may damage the climate. So we use technology,” President Yudhoyono said when opening the food seminar.

The President believed that technology use in producing food would give more optimal result. He was optimistic that Indonesia would have self-sufficient food supply after developing technology for food in 5-10 years.

Concerning nutritional adequacy, the government put it as a priority. Moreover, the government is working to provide affordable food for people.

“For the country, we must ensure the availability of food commodities with affordable price,” the President affirmed. (01/04DEMIS RIZKY GOSTA /LINDA T. SILITONGA/MARTIN SIHOMBING) (T04/msw)

By Raydion