Shippers ask govt to provide tax incentive for CIF coal exporters

The government has been advised to provide tax incentive for coal exporters applying CIF (cost, insurance, and freight) trade system in their export activities.

Ibnu Wibowo of the Indonesian National Shipowners Association (INSA) said the incentive would encourage coal exporters and traders to use Indonesian-flag vessels.

He said that financial losses resulting from the free on board (FOB) system in commodity export reached about $4.95 billion a year due to the minimum use of national flag vessels.

He feared that the losses could further increase in the second half of this year if freight cost for the shipment of Indonesian coal overseas increases as demand from China and Japan for the commodity rises.

?Please provide tax incentive for exporters using the CIF trade system, not FOB, so that they will be encouraged in using Indonesian vessels,? Ibnu told Bisnis.com Wednesday.

He said that coal export volume in 2010 is estimated to be the same as last year?s, which reached 220 million tons, which are mostly shipped to Japan, Hong Kong, Thailand, China, the Philippines, Malaysia, and Europe.

He added that the FOB system does not provide much economic benefit for the country as the authority in appointing which vessels to use lies in the hands of the export destination countries.(*)