Fri, 24 Jul 2015
With the economy slowing and retail sales falling, Indonesia yesterday raised import tariffs on more than a thousand items covering many consumer goods such as clothes, food and cars.

The decision is likely to make some Indonesians shift to having coffee at a local shop over Starbucks and drive some mothers to choose locally made diapers over imported brands.

The populist move is meant to protect local industry that is competing with imported products.

The decision is expected to improve the domestic image of President Joko Widodo, whose administration has suffered mounting criticism for not being able to lift economic growth. He has also been hurt by accusations that he has let the elite in his ruling party interfere with his decision-making, sending a bad signal to foreign investors.

Mr Joko says he is keen to make his country more attractive to foreign investors by streamlining the government, cleaning up law enforcement and pushing through major infrastructure projects.

NEW IMPORT TARIFFS

20% Duty on imported tea and coffee, raised from 5 per cent.

30% Tariff on meat, up from 5 per cent.

50% Tariff on cars, up from 10 per cent to 40 per cent previously.

150% Duty on imported liquor. It was 125,000 rupiah per litre before.

Which makes the decision on tariffs puzzling to some investors, who say the step is badly timed as South-east Asia's largest economy continues to weaken.

Indonesia's manufacturing sector has been relatively stagnant in the past decade, with the government more focused on promoting the commodity sector as an engine of growth. Palm oil, rubber and coal have been important sources of revenue but weakness in the commodity sector has hit the economy and government revenues hard of late.

"Imposing this is out of alignment with the economic integration agenda and a step backward from the global trend of most economies forging FTAs (free trade agreements) towards lower tariffs, if not zero," said Mr Victor Tay, chief operating officer of the Singapore Business Federation.

"Indonesia has the largest population in Asean and is also a net importer of many products. Erecting such barriers may in the short term protect the local industry, but in the longer term, (might lead to) the inability to strengthen in the face of competition. This will not serve the greater business community well, especially if other countries start erecting their own barriers on a reciprocal basis," he added.

Exacerbating the problem is the weakening rupiah currency, pushing domestic prices higher and hurting consumer buying power. Corporations are expanding at only half the pace they were last year.

Under the new tariffs, the duty on imported tea and coffee was raised to 20 per cent from 5 per cent, and the tariff on meat is now 30 per cent rather than 5 per cent, Reuters reported. Imports of whisky, brandy and other liquors are now subject to a duty of 150 per cent of their market price. Previously, the duty was 125,000 rupiah (S$12.75) per litre.

The tariff on cars was fixed at 50 per cent, from a range of 10 per cent to 40 per cent previously. The duty on imported candy was raised to a range of 15 per cent to 20 per cent, from a flat 10 per cent.

Tariffs were also raised for many other goods, including clothes, condoms, carpets and air-conditioners, Reuters also reported.

Indonesia imports mostly oil, chemicals, vessels, steel pipes and clothes from Singapore. Most of these items were not covered in the revision. For clothes, the new import tariffs were raised mostly to between 15 per cent and 25 per cent, according to the government.

"Domestic industry is being overwhelmed by the flows of imported goods. We need to curb these flows so domestic products would not be outnumbered," Mr Heru Pambudi, the Customs and excise tax director-general, told reporters.

Indonesia's imports last month totalled US$12.96 billion (S$17.7 billion), 17.4 per cent lower than the same month a year ago. Imports in the January-June period fell 17.8 per cent to US$73.94 billion, according to Indonesia's statistics agency.

Mr A. Prasetyantoko, an economist at Atma Jaya University in Jakarta, said: "Higher import taxes would reduce the supply of goods and increase domestic prices, which would in turn further weaken buying power, then economic growth."





News Search/Filter
Transaction Rates
19 Oct 18
Buy
Sell
AED1
4,156.09
4,156.09
AFN1
200.85
200.85
ALL1
139.46
139.46
AMD1
31.59
31.59
ANG1
8,599.38
8,599.38
AOA1
50.47
50.47
ARS1
415.58
415.58
AUD1
10,832.05
10,832.05
AWG1
8,480.52
8,480.52
AZN1
8,966.17
8,966.17
BAM1
8,989.90
8,989.90
BBD1
7,632.45
7,632.45
BDT1
180.00
180.00
BGN1
8,940.39
8,940.39
BHD1
40,496.18
40,496.18
BIF1
8.52
8.52
BMD1
15,264.91
15,264.91
BND1
10,822.65
10,822.65
BOB1
2,208.63
2,208.63
BRL1
4,102.46
4,102.46
BSD1
15,264.91
15,264.91
BTC1
97,727,453
97,727,453
BTN1
207.56
207.56
BWP1
1,434.50
1,434.50
BYN1
7,233.41
7,233.41
BZD1
7,593.93
7,593.93
CAD1
11,671.11
11,671.11
CDF1
9.34
9.34
CHF1
15,327.75
15,327.75
CLF1
652,904.83
652,904.83
CLP1
22.57
22.57
CNH1
2,197.53
2,197.53
CNY1
2,200.28
2,200.28
COP1
4.94
4.94
CRC1
25.73
25.73
CUC1
15,264.91
15,264.91
CUP1
592.81
592.81
CVE1
160.01
160.01
CZK1
675.65
675.65
DJF1
85.73
85.73
DKK1
2,343.76
2,343.76
DOP1
305.30
305.30
DZD1
128.61
128.61
EGP1
852.31
852.31
ERN1
1,017.78
1,017.78
ETB1
547.64
547.64
EUR1
17,484.56
17,484.56
FJD1
7,143.83
7,143.83
FKP1
19,873.60
19,873.60
GBP1
19,873.60
19,873.60
GEL1
6,238.24
6,238.24
GGP1
19,873.60
19,873.60
GHS1
3,161.88
3,161.88
GIP1
19,873.60
19,873.60
GMD1
308.46
308.46
GNF1
1.68
1.68
GTQ1
1,973.35
1,973.35
GYD1
72.99
72.99
HKD1
1,947.43
1,947.43
HNL1
633.66
633.66
HRK1
2,356.96
2,356.96
HTG1
214.10
214.10
HUF1
54.10
54.10
IDR1
1.00
1.00
ILS1
4,171.93
4,171.93
IMP1
19,873.60
19,873.60
INR1
207.63
207.63
IQD1
12.80
12.80
IRR1
0.35
0.35
ISK1
129.62
129.62
JEP1
19,873.60
19,873.60
JMD1
115.42
115.42
JOD1
21,505.81
21,505.81
JPY1
136.05
136.05
KES1
151.46
151.46
KGS1
222.74
222.74
KHR1
3.72
3.72
KMF1
35.92
35.92
KPW1
16.96
16.96
KRW1
13.41
13.41
KWD1
50,341.70
50,341.70
KYD1
18,316.82
18,316.82
KZT1
41.88
41.88
LAK1
1.78
1.78
LBP1
10.09
10.09
LKR1
89.11
89.11
LRD1
97.22
97.22
LSL1
1,064.56
1,064.56
LYD1
11,040.70
11,040.70
MAD1
1,605.86
1,605.86
MDL1
896.65
896.65
MGA1
4.32
4.32
MKD1
285.16
285.16
MMK1
9.59
9.59
MNT1
6.12
6.12
MOP1
1,890.37
1,890.37
MRO1
42.75
42.75
MRU1
425.08
425.08
MUR1
443.79
443.79
MVR1
987.38
987.38
MWK1
20.98
20.98
MXN1
796.91
796.91
MYR1
3,663.98
3,663.98
MZN1
251.92
251.92
NAD1
1,047.69
1,047.69
NGN1
41.99
41.99
NIO1
474.27
474.27
NOK1
1,844.40
1,844.40
NPR1
129.73
129.73
NZD1
9,979.51
9,979.51
OMR1
39,655.41
39,655.41
PAB1
15,264.91
15,264.91
PEN1
4,575.12
4,575.12
PGK1
4,545.77
4,545.77
PHP1
281.85
281.85
PKR1
114.84
114.84
PLN1
4,060.93
4,060.93
PYG1
2.56
2.56
QAR1
4,192.41
4,192.41
RON1
3,743.99
3,743.99
RSD1
147.40
147.40
RUB1
231.94
231.94
RWF1
17.34
17.34
SAR1
4,069.07
4,069.07
SBD1
1,917.73
1,917.73
SCR1
1,099.30
1,099.30
SDG1
324.29
324.29
SEK1
1,687.99
1,687.99
SGD1
11,049.92
11,049.92
SHP1
19,873.60
19,873.60
SLL1
1.81
1.81
SOS1
26.33
26.33
SRD1
2,046.78
2,046.78
SSP1
117.18
117.18
STD1
0.72
0.72
STN1
719.36
719.36
SVC1
1,744.45
1,744.45
SYP1
29.63
29.63
SZL1
1,066.20
1,066.20
THB1
467.51
467.51
TJS1
1,621.43
1,621.43
TMT1
4,349.00
4,349.00
TND1
5,363.83
5,363.83
TOP1
6,619.96
6,619.96
TRY1
2,708.22
2,708.22
TTD1
2,264.58
2,264.58
TWD1
493.03
493.03
TZS1
6.67
6.67
UAH1
544.34
544.34
UGX1
4.02
4.02
USD1
15,264.91
15,264.91
UYU1
465.54
465.54
UZS1
1.85
1.85
VEF1
0.06
0.06
VND1
0.65
0.65
VUV1
137.28
137.28
WST1
5,826.50
5,826.50
XAF1
26.65
26.65
XAG1
222,577.30
222,577.30
XAU1
18,713,654.36
18,713,654.36
XCD1
5,648.33
5,648.33
XDR1
21,303.58
21,303.58
XOF1
26.65
26.65
XPD1
16,393,967.54
16,393,967.54
XPF1
146.52
146.52
XPT1
12,639,239.40
12,639,239.40
YER1
60.98
60.98
ZAR1
1,056.91
1,056.91
ZMW1
1,280.00
1,280.00
ZWL1
47.35
47.35
Taxation Exchange Rates
31 Aug 16 - 06 Sep 16
USD 1
13,232.00
AUD 1
10,043.30
CAD 1
10,213.70
DKK 1
1,999.40
HKD 1
1,706.22
MYR 1
3,283.28
NZD 1
9,623.63
NOK 1
1,605.23
GBP 1
17,433.70
SGD 1
9,757.68
SEK 1
1,569.45
CHF 1
13,631.10
JPY 100
13,101.00
MMK 1
11.01
INR 1
197.29
KWD 1
43,920.70
PKR 1
126.23
PHP 1
285.00
SAR 1
3,528.53
LKR 1
91.12
THB 1
382.08
BND 1
9,756.53
EUR 1
14,885.50
CNY 1
1,987.61

Okusi Associates: Indonesian Business & Management Services