Jakarta raises import taxes for more than 1,000 items
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With the economy slowing and retail sales falling, Indonesia yesterday raised import tariffs on more than a thousand items covering many consumer goods such as clothes, food and cars.
The decision is likely to make some Indonesians shift to having coffee at a local shop over Starbucks and drive some mothers to choose locally made diapers over imported brands.
The populist move is meant to protect local industry that is competing with imported products.
Under the new tariffs, the duty on imported tea and coffee was raised to 20 per cent from 5 per cent, and the tariff on meat is now 30 per cent rather than 5 per cent, Reuters reported.
Imports of whisky, brandy and other liquors are now subject to a duty of 150 per cent of their market price. Previously, the duty was 125,000 rupiah (S$12.75) per litre.
The tariff on cars was fixed at 50 per cent, from a range of 10 per cent to 40 per cent previously. The duty on imported candy was raised to a range of 15 per cent to 20 per cent, from a flat 10 per cent.
Tariffs were also raised for many other goods, including clothes, condoms, carpets and air-conditioners, Reuters also reported.
The decision is expected to improve the domestic image of President Joko Widodo, whose administration has suffered mounting criticism for not being able to lift economic growth.
He has also been hurt by accusations that he has let the elite in his ruling party interfere with his decision-making, sending a bad signal to foreign investors.
Joko says he is keen to make his country more attractive to foreign investors by streamlining the government, cleaning up law enforcement and pushing through major infrastructure projects.
“Imposing this is out of alignment with the economic integration agenda and a step backward from the global trend of most economies forging FTAs (free trade agreements) towards lower tariffs, if not zero,” said Victor Tay, chief operating officer of the Singapore Business Federation.
A. Prasetyantoko, an economist at Atma Jaya University in Jakarta, said: “Higher import taxes would reduce the supply of goods and increase domestic prices, which would in turn further weaken buying power, then economic growth.”
