F

inance Minister Agus Martowardojo hinted at important points of a much-awaited new regulation on import duties for foreign films, which would simplify import procedures, with the complete rules to be announced this week.

According to the revised Finance Minister regulation (PMK) already in effect since Thursday, film importers would pay import duties of Rp 21,000 (US$2.43) to Rp 22,000 per minute for each copy of a film they brought into the country, Agus said Friday.

Bambang Brodjonegoro, acting chief at the ministry’s fiscal policy office (BKF), told The Jakarta Post the complete version of the regulation would be released this week.

Previously, importers had to pay an ad valorem tax of a certain percentage of the value of tickets sold for the film copy — a royalty policy strongly criticized by film importers who claimed it complicated calculations as it depended on sales instead of determining tax costs upon arrival of the imported film copies.

The old rules resulted in importers owing billions of rupiah of royalty fees and sent three local importers — two of which were key importers of Hollywood films — to the tax court. The importers refused to pay the taxes and penalties, claiming they were not aware of them.

Since then, film fans in Indonesia have had to settle for underrated films while much-awaited blockbusters pass them by.

“Now, [major releases and smaller films] will cost the same,” Agus said.

“This means that before importing a film, the importer will have to calculate whether the film will sell well. If not, they would not import it as they could stand to make a loss. If [taxes] are too low as before, [importers] will bring in anything, which would unfairly sideline the domestic film industry.”

With the new rules, import duties for one film copy would be Rp 2.1 million to Rp 2.2 million given an average running time of 100 minutes.

However, Agus said local importers normally brought in 20 to 40 copies for each release. Therefore, one film could cost them up to Rp 88 million in import duties.

“Indonesia doesn’t have a film duplication system, although neighboring countries do,” he said, referring to Thailand, which imposes high specific duties for imported films and duplicates the films once they had been brought in.

Movie theater chain figures, including Indonesian Union of Cinema Owners (GPBSI) chairman Djonny Sjafruddin and Blitz Megaplex CEO Ananda Siregar, welcomed the new rules, but said it did not guarantee the comeback of Hollywood films ahead of the premieres of summer blockbusters such as Harry Potter and The Deathly Hallows - Part 2, Super 8, Thor, X-Men: First Class and Transformers: Dark Of The Moon.

In the long term, the Finance Ministry, Culture and Tourism Ministry and the Investment Coordinating Board (BKPM) would lay out initiatives to make the cinema industry more competitive so more importers and distributors could be involved and foreign film producers could establish offices here.

“Ideally [foreign film producers] could form a joint venture with Indonesian business partners because the direct presence of international giants will ensure good governance, systems, discipline and compliance with tax and duty obligations,” Agus said.