British firms hampered on projects as government imposes 80% import duty on construction machinery

Recovery work in tsunami-hit Indonesia has been hampered by a tax row between the government and foreign firms over import duties on equipment.

The Jakarta government has demanded companies pay 80% import duty on equipment to be used in the recovery mission, a move that has hit construction firms working in the region. Although the government has arranged some concessions, many firms have been caught by bureaucracy surrounding the arrangements.

UK construction logistics company Wilson James, which has been working with charity Save the Children in Banda Aceh and the Indonesian island of Nias, says its operations suffered setbacks as a result of the heavy duty. The firm had 24 specialist vehicles impounded after importing them from the UK in January as it did not believe it should pay the tax.

Logistics manager Steve Unsworth said: “We expected to get clearance for the equipment, but it didn’t happen. From there, the problems went on and on. It’s ridiculous that the government is messing around with bureaucracy while people are still suffering.”

It’s not acceptable. The authorities shouldn’t punish people for helping out

Source working on reconstruction

One source involved in reconstruction in the region slammed the Indonesian government for attempting to generate extra revenue. He said: “I suppose this is what you get when you deal with an economically struggling country, but it’s not acceptable. The authorities shouldn’t punish people for helping them out.”

UK firms have been preparing for further involvement in the parts of Asia hit by the Boxing Day tsunami after the Sri Lankan government and aid agencies released a timetable for infrastructure repairs in the country.

Tenders are invited for national road and bridge projects worth an estimated total of £178.5m and local projects worth £21.3m. The European Commission has pledged a grant of more than £27m to help finance the works.