The Impact of Aircraft Spare Parts Import Duty Exemption on the MRO Industrys Competitiveness and Its Services Export
Farida Rahmawati*, Choirin Nisaa, Rizka Isditami Syarif, Herindra Adhi Nusantara
Trade Analysis and Development Agency, Ministry of Trade of Republic of Indonesia
Jl. M. I. Ridwan Rais No. 5, Gambir, Jakarta 10110, Indonesia
*faridarahma13[at]gmail.com
Abstract
Along with the increasing in demand for air travel, growth of airlines and number of flights paths, Indonesias goal to become a maintenance center for large-scale aircraft needs to be supported by a good competitiveness of the airline maintenance industry. This study aims to identify the impact of import duty exemption on aircraft spare parts on the competitiveness and service export of the Aircraft Maintenance, Reparation, and Overhaul (MRO) industry including factors affected MRO competitiveness. In addition, this study aims to identify the problems encountered during the implemention of the policy, the types of aircratf parts to be exempted and the criterias for products to be eligible for exemption from import duties. The research method used in this study are qualitative and quantitative descriptive analysis, Porter five-force model and Analytical Hierarchy Process (AHP). The results of the study showed that the import duty exemption policy increased MRO services from 30 percent to 49 percent during 2013-2017. Constraints in implementation are procedures and differences in customs areas where the longest is for bonded zones. Special customs policies for MROs as well as the exemption of import duties for goods related to MROs which 90 percen originating from imports will greatly encourage competitiveness which relies heavily on aircraft down time. The types of goods that need to be exempted from import dutties are consumable and repairable groups in both new and non-new capital goods categories.
Keywords: MRO, Porters Five Force Model, AHP, import policy
Topic: Trade policies strategic Responses