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Influx of imported goods sold online hurts SMEs: Apindo
The Indonesian Employers Association (Apindo) has welcomed the government’s move to lower the tax threshold on goods imported for retailing on e-commerce platforms, saying the policy was the right step to protect small and medium enterprises (SMEs) against imported consumer goods
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span>The Indonesian Employers Association (Apindo) has welcomed the government’s move to lower the tax threshold on goods imported for retailing on e-commerce platforms, saying the policy was the right step to protect small and medium enterprises (SMEs) against imported consumer goods.
Apindo chairman Hariyadi Sukamdani said the sharp increase in foreign products sold through online marketplaces had severely hurt local producers because of a lack of protection from the government.
He said the number of imported goods sold through e-commerce platforms had increased to 57.9 million items in 2019 from only 19.5 million in 2018 and 6.1 million in 2018.
“If e-commerce retail products keep coming in, it will severely hurt our SMEs,” he said during a press conference on Thursday, adding that the government’s new import tax regulation was an appropriate move to tackle the issue.
Finance Ministry Regulation No. 199/2019 lowers the threshold for taxing consumer goods imported for retailing on e-commerce platforms to just US$3 from $75 previously. The regulation will take effect on Jan. 30.
The government imposes an import duty of 7.5 percent in addition to value-added tax of 10 percent on e-commerce sales of imported goods.
However, the new import tariff will not apply to bags, shoes or garments, which will be subject to normal tariffs. Books will also be exempted from the tax.
“The cut in the tax threshold creates fairness for all retailers,” Hariyadi said. “So local products’ prices can compete with the imported ones.”
Previously, the Directorate General of Customs and Excise said that the regulation was issued to create a level playing field for the benefit of SMEs, which mostly sell their goods through online marketplaces.
Meanwhile, the head of the Indonesian Chamber of Commerce’s (Kadin) permanent committee for domestic trade, Tutum Rahanta, said the regulation would protect SMEs, especially those who abided by the law.
He also told reporters that the inflow of imported goods had made local businesses reluctant to produce and sell products. The government, he said, could also lose tax revenue from local industries.
"The regulation is part of justice for our businesses," Tutum said. “If people want to sell, they should do so according to the right procedure.”
However, Indonesian E-commerce Association (idEA) public policy and government relations manager Rofi Uddarojat said e-commerce transactions accounted for only 5 percent of total imports.
He added that most of idEA’s members sold products produced by local SMEs, so the regulation would not affect sales in e-commerce greatly.
In another recent regulation apparently aimed at restricting imports of consumer goods, the government blocks mobile phones not bought through official retail channels. The government said the regulation, which in force since August and based on the a device’s international mobile equipment identity (IMEI) number, aims to curb black market sales.
“Since the IMEI verification was implemented, we have seen a double-digit increase in both online and offline legal phone sales,” said Budihardjo Iduansjah, chairman of the Indonesian Shopping Center Tenants Association (Hippindo).
He went on to say that that such a regulation was proven effective in increasing sales of legal goods. “Proper SMEs will also see sales increase. They will not incur losses,” Budi concluded.
According to data provided by the customs office, about 90 percent of the products sold through online marketplaces in Indonesia are imported. This was possible because some of the local online marketplace operators had foreign partners, such as Lazada with Taobao from China and Blanja.com with American online store eBay.
The data also suggested that, in 2018, sales of imported goods sold through online stores rose by an average 10.5 percent per month.
E-commerce transactions in Indonesia are expected to quadruple in the next six years with a projected gross merchandise value of $82 billion in 2025, up from about $21 billion in 2019, according to the e-Conomy SEA report by Google, Temasek and Bain & Company.
