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Jakarta Post

Indonesia revives excise plan on plastics, dirty vehicles and sweet drinks

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Wed, February 19, 2020   /   03:14 pm
Indonesia revives excise plan on plastics, dirty vehicles and sweet drinks Finance Minister Sri Mulyani Indrawati gives a speech at the Mandiri Investment Forum 2020 in Jakarta, on Feb. 5. (JP/Dhoni Setiawan )

Indonesia is planning to impose an excise on plastics, fossil-fuel vehicles and sweet drinks in a move aimed at reducing their adverse environmental and health effects, Finance Minister Sri Mulyani Indrawati has said.

She said the planned excise would reduce plastic consumption by up to 50 percent, adding the government would likely receive an excise of Rp 1.6 trillion (US$116.6 million) each year.

“We are hoping that this will make plastic producers transform into producers of environmentally friendly goods,” the minister told House Commission XI overseeing financial affairs. Sri Mulyani said the excise only made sense today as it would unify regulations recently issued across the country.

Several provinces across Indonesia have announced a ban on plastic bags, the latest ones being Jakarta and Bali, with consumers’ and producers’ awareness of sustainable consumption on the rise.

The Finance Ministry’s Customs and Excise Directorate General is planning to slap a plastic duty of Rp 30,000 per kilogram on plastic producers and importers, translating into Rp 200 duties per plastic sheet.

Plastic bags will cost Rp 450 to Rp 500 per sheet after duties. The government has been planning to impose an excise on plastics since 2017 but has yet to receive approval from lawmakers.

Indonesia, the world’s second-largest marine polluter, accumulates about 1.3 million tons of plastic waste every year, of which 70 percent goes to landfills, 15 percent ends up in rivers and oceans and only 10 to 15 percent is recycled.

Indofood, Danone and Mayora are the top three producers of plastic waste in Indonesia, according to The Brand Audit Report 2019 by Break Free from Plastic. Top corporations have joined forces in driving the transition to a circular economy by boosting their recycling efforts to reduce plastic packaging waste at landfills in the country.

Sri Mulyani on Wednesday also asked lawmakers for approval to impose an excise on fossil-fuel vehicles, saying the pollution in big cities influenced the government’s decision to devise a plan on limiting consumption.

“Every vehicle that produces CO2 emissions is subject to the excise except electric vehicles, mass transportation and state-owned vehicles, as well as vehicles for exports,” said the minister, adding that local producers and importers were subject to multi-tariff duties.

She added the government would likely receive Rp 15.7 trillion for taxing high-emissions vehicles.

The Finance Ministry is also planning to put duties on sweet drinks to reduce the number of diabetes cases in the country, one of the main causes of death among Indonesians. Sri Mulyani also cited the need for people to live a healthy lifestyle.

"There are a lot of countries that put duties on dangerous goods including sweet drinks," Sri Mulyani said. “If approved by the parliament, we will impose duties on ready-to-drink beverages and powdered beverages that contain sugar, excluding non-manufactured drinks and exports.”

The government would impose duties of Rp 1,500 per liter for packaged tea and Rp 2,500 for carbonated beverages such as Coca-Cola and energy drinks, she added. The government was likely to receive Rp 6.25 trillion from such duties, the minister added.

The House's Commission XI has responded to the government's excise plan by agreeing to immediate duties on plastic bags. 

"The House's Commission XI requests that the government create a road map that expands other new excise objects," a commission document shows.

The Finance Ministry is due to respond to the commission's decision within seven working days to further proceed with next steps, which may include deliberation on the new excise regulation on plastic bags.