Indonesia: Finance Ministry to review import tax hike for 1,147 consumer goods

  • The Finance Ministry will look into the possibility of revising a policy it had implemented in Sep 18 that increased import tax on 1,147 consumer goods products after concerns were raised that it hampered the supply chain for exports.
  • Finance Minister Sri Mulyani Indrawati said the policy was intended to control excessive imports, which were blamed for the country’s ballooning trade deficit to USD8.57bn in 2018.
  • “We previously aimed to substitute those goods with domestic products, but the policy has instead disrupted the supply chain for exports. We will look into the issue and respond accordingly,” Sri Mulyani said on 19 Feb 19.
  • According to Edward Otto Kanter from Indonesia’s Priority Line Association, the higher import tax has had an adverse effect on the competitiveness of certain Indonesian products being exported to a number of countries.
  • The policy particularly affected industrial players operating in bonded zones and those who have to import materials for export-oriented goods (KITE), he added.
  • “The higher import tariffs have placed a greater burden on exporters because their commodities were affected by the policy.”

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