Jakarta, Sept 23 - Indonesia will scrap import duties for some raw materials, including steel and cocoa beans, to help local industries cope with increasing costs due to higher fuel and commodity prices, the Industry Minister said on Tuesday.
The government will pay the import duties for 10 industries, including iron and steel, cocoa-processing, automotive, dairy products, power plant contractors, electronics, and shipyards, Fahmi Idris said.
"Rising fuel prices have increased production costs, which in turn has greatly affected industry output," Idris told reporters.
"The fiscal incentive is intended to keep the industry running," he added.
Prices of commodities rallied earlier this year but have since fallen back.
Crude oil hit a record of $147.27 a barrel in July, although it started to lose ground in August as high prices started to crimp demand, particularly for oil which is now at $107.53 a barrel.
Raw materials that will no longer be subject to import duty include hot-rolled coil steel coil, used in the construction and ship-building industries. The import duty is currently between 7.5-12.5 percent.
The government will allocate 2 trillion rupiah ($215 million) this year and 2.5 trillion rupiah in 2009 for the fiscal incentive program, said Anggito Abimanyu, head of fiscal policy analysis at the finance ministry.