The Indonesian Exporters Association (GPEI) is seeking incentives from the government for the use of local raw materials to manufacture its products.

GPEI chairman Benny Soetrisno said on Wednesday that certain imported raw materials were cheaper than local ones because of government incentives implemented through a scheme known as the import facility for export oriented products (KITE).

Under the KITE scheme, Benny said, the government freed exporters from paying value-added tax (VAT).

“However, the government has no policy in place [to provide incentives] for exporters who use local raw materials for their products,” he said as quoted by kontan.co.id.

He stressed that the incentives would encourage more producers to use local raw materials that would help them improve their cash flow.

It would also narrow the trade deficit [that had reached US$7.5 billion in the first 11 months of 2018] because more producers would use local raw materials, Benny said.

Due to the absence of such incentives, exporters were currently paying 10 percent in VAT, he added.

Benny also called on the government to accelerate negotiations with other countries to establish free trade agreements to expand export opportunities. (bbn)