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Jakarta Post

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

  • News Desk

    The Jakarta Post

Jakarta   /   Tue, February 19, 2019   /   03:09 pm
Finance Ministry to review import tax hike for 1,147 consumer goods Finance Minister Sri Mulyani Indrawati (AFP/Zach Gibson)

The Finance Ministry will look into the possibility of revising a policy it had implemented last September 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 US$8.57 billion 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 as quoted by kontan.co.id on Tuesday.

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.”

The government introduced the policy on Sept. 5, 2018, increasing the import tax from 2.5 percent to 10 percent for personal care products like shampoo, soap and cosmetics, along with 215 other consumer goods.

The regulation also raised the import tax for 210 goods from 7.5 to 10 percent, including luxury items like supercars. An import tax of 7.5 percent, a hike from the current 2.5 percent, is to be imposed on 719 other imported goods and products, including audio speakers and swimwear. (bbn)