JAKARTA: The government will allow the use of subcontractor in bonded zone to encourage partnership between company and small and medium industries.
The use of subcontractor by bonded company will be maintained, particularly for labor-intensive industries such as garment and footwear, Ministry of Industry M. S. Hidayat said.
“The government agreed to revise the regulation on bonded zone. The Ministry of Finance will formulate such revision in 1 week,” he said last week.
The banning of subcontracting in bonded zone as regulated through the Finance Ministry Decree No. 147/2011 could make thousands SMEs close their businesses due to the loss of contracts from companies in bonded zones.
Ministry of Industry also recommends the government to allow bonded company to sell its product in domestic market up to 50% from last year’s export value. It should be maintained until the threat global economic crisis passes.
The Finance Ministry Decree No. 255/2011 about the revision of decree No. 147/2011 on bonded zone has limited the use of subcontractor until 2012 or the end of contract period.
The decree also regulates bonded company with land area less than 1 hectare to move into industrial park in 2017. Meanwhile, the sales from bonded zone to domestic market remain restricted by 25% as of this year.
Chairman of the Indonesian Textile Association (API) Ade Sudradjat said subcontracting system is a common thing for business in the garment industry worldwide.
Around 1,000 garment companies employing more than 400 people per company may close their businesses if there is no subcontracting mechanism. (T06/MSW)
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