REPUBLIKA.CO.ID, JAKARTA - Coordinating Ministry of Economy proposes the implementation of inland free trade area (FTA) to build Indonesian capacity in free trade and strengthen domestic market, the Deputy Coordinating Minister of Economy on Investment and Trade, Edy Putra Irawady said. Irawady believes that Inland FTA will boost competitiveness of Indonesian products.

He said that the facility could be given to companies which their products contain at least 40 percent of local content. They also must import raw materials from other FTA countries.

After joining ASEAN Free Trade Area (AFTA), Indonesia and ASEAN countries signed FTA agreement with several countries, such as Japan, Australia, and China. Indonesia will soon sign FTA agreement with European Union.

Currently, Indonesia imposes import tax, income tax, value added tax and luxury tax for imported raw materials. Meanwhile, finished goods from FTA countries are free from import and other taxes. The implementation of inland FTA can avoid double taxes on raw materials.

Director of Customs at Directorate General of Tax and Customs, Heru Pambudi, said that his institution will study the proposal and he emphasized that domestic market must become the target of national industry.

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