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  • 6.4.4-MARKET PROFILES-COTTON IMPORT PROCEDURES IN INDONESIA

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  • Cotton import procedures in Indonesia

    Chapter 6 - Market profiles - Indonesia 

     
     
    Import of raw cotton is freely allowed for all users such as mills and converters into yarn for re-export. There are neither inhibitive procedures nor any strangling non-tariff barriers in force restricting the growth of this sector.

    There is no import tariff imposed on raw cotton except VAT, which is adjusted against the company’s other categories of tax obligation. Since there are no import tariffs in force, the usual routes for helping to improve trade volumes through preferential or differential duty treatment may not be applicable. In January 2007, the Indonesian Government issued a regulation that eliminated the 10% VAT imposed on certain primary agricultural products, including cotton.

    Unlike some other Asian countries, the local Indonesian spinning mills do not get any export incentives from the Government.

    Major international cotton shippers

    Textile companies import cotton mostly through international trading houses. These traders have local representatives or agents. Indonesian buyers prefer to establish long-term relationships with a few agents who represent reputable trading companies in various cotton exporting countries.

    Because of the dependence on imported cotton fibre, all the major world players in the cotton trade are represented in Indonesia and it has become a highly competitive market. Leading companies such as Dunavant, Cargill, Allenberg, Reinhart, Volkart, CDI, Copaco are active, as are a few of the leading Japanese trading houses such as Marubeni, Nichimen and Toyo.

    Strangely enough, some shippers are represented by two or three agents, triggering an unhealthy situation of price wars between agents who are representing the same shipper.