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Indonesia threatens tariffs, scaled back imports to spur domestic health industry
Senior cabinet minister Luhut Pandjaitan laments Indonesia's continued overreliance on health equipment imports and has repeatedly called for local manufacturers to fulfill domestic demand.
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Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan speaks at a webinar about the government's efforts to promote made-in-Indonesia products in Jakarta, on June 23. (Coordinating Maritime Affairs and Investment Ministry/Coordinating Maritime Affairs and Investment Ministry)
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rom bumping up local content in manufacturing to threatening to stop imports of personal protective equipment (PPE), the government is pushing hard to produce medical supplies domestically and cut the exorbitant cost of imports from its COVID-19 budget.
Speaking at a webinar on Monday, Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan called for more incentives to be given to import-substitution industries in the health sector. Imports of medical supplies take up a big chunk of the COVID-19 response budget.
“If it’s necessary, we are going to impose tariffs on imported [medical equipment] products that we already produce domestically,” said the senior minister, suggesting this would incentivize new investments for local producers.
He also revealed plans to increase the local content (TKDN) requirement for pharmaceutical products to 55 percent and prioritize locally sourced products in the state’s procurement drive for medical supplies, to ensure that more is being manufactured domestically.
“So there will be no more people coming up to me to say, ‘Sir, there’s some cheap PPE from abroad’ – we’ll only use local,” he exclaimed.
Luhut has been among the few officials who regularly call out the country’s reliance on imported PPE and other supplies such as active pharmaceutical ingredients (API), which continues to grow every year.
He believes Indonesia has enough wherewithal to produce more medical equipment, given the threefold increase in local businesses that manufacture such equipment.
