RI, JAPAN TO ABOLISH DUTIES ON COMPONENT IMPORTS STARTING JULY 1

Jakarta, June 24 (ANTARA) - Indonesia and Japan are to abolish duties on each other's component imports under the Economic Partnership Agreement (EPA) starting July 1 this year, an official said.

"On July 1, 2008, we will launch MIDEC (Manufacturing Industry Development Center) cooperation under the IJEPA (Indonesia-Japan Economic Partnership Agreement) in Japan," Director General of Transport Equipment and Telematic Industries at the Industry Ministry Budi Darmadi said on Tuesday.

The launch of the MIDEC cooperation would mark the start of free trade between the two nations because at that time Indonesia would slash duties on its component imports from Japan by around 85 percent and Japan would cut duties on its component imports from Indonesia by nearly 35 percent, he said.

"We hope our businessmen and industries will benefit from the opportunity to play a bigger role and gain economic benefits," he said.

Director of Land Transportation and Aviation Equipment Industries Syarif Hidayat meanwhile said although the two nations had agreed to abolish duties on each other's component imports, the Industry Ministry still had to wait for a decree of the Finance Minister to that effect.

"We are still waiting for the decree of the Finance Minister, while Japan itself no longer needs to ratify (a regulation on the reduction of import duties)," he said.

Moreover, duties on component imports in Japan were very low at less than 5 percent applicable to all most favoured nations (MNFs) while duties on component imports in Indonesia reached 5-15 percent, he said.

Among the Japanese components on which import duties were abolished were certain types of steel and plastics needed by automotive, electronic, etc. industries, he said.

Budi Darmadi expressed hope Japan would be committed to helping develop Indonesia's second layer industries particularly the automotive industry through the MIDEC cooperation.

"We need technical assistance to improve the performance of the second layer component industries which mostly involve medium-sized enterprises in order to achieve self-reliance in national automotive industry," he said.