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Indonesia amends bonded zone rules for textile makers
19
Jan '12
Indonesia's Ministry of Finance has amended rules on bonded zones to protect interests of local manufacturers, including textile producers.

In Indonesia, a bonded zone is a building or a confined area used to process industrial goods and materials for export. Licensed units in a bonded zone enjoy several benefits including tax and duty exemptions.

The Ministry has extended the deadline for relocation of factories, which are currently in bonded zones and are occupying a space of less than 10,000 sq m, to industrial estates by an additional two years to December 31, 2016.

In addition, the Ministry has also extended the deadline for firms to terminate specified outsourcing contracts till December 31, 2012. All outsourcing contracts placed for products that are directly related with the core business activity of the company concerned have to be terminated within the specified period.

These changes are being made in the bonded zones to safeguard Indonesia's domestic market and to stop misuse of concessions available in such zones, the Ministry said.

The relocation of companies to industrial estates is expected to improve the control on the flow of goods, both in and out of bonded zones.

Last year, 73 cases of misuse of facilities in bonded zones had come to light, mainly in the textile and garment industry. These cases involved awarding subcontracts without required permits and smuggling of raw materials inside the bonded zone.

The Indonesian Textile Association (API) supported the Government's move to ensure better functioning of bonded zones, as it would boost textile and other exports.

However, API hoped that the Government would soon launch some supporting incentives to further encourage the upstream fibre industry.

Fibre2fashion News Desk - India

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