Taxed Batam no shoppers' lure<\/p>\n
Fadli, The Jakarta Post\/Batam<\/p>\n
For the past eight months, business has been on the downturn for
\nSetiawati, 27, an attendant at Seline Boutique, which sells
\nforeign apparel, perfume and accessories brands in the Nagoya
\nindustrial area on Batam Island.<\/p>\n
\"Since January, only about 60 people come into our boutique
\neach day, and most of them left after learning that our prices
\nwere not much different from those offered at shops in Jakarta
\nand other places,\" she said in dismay.<\/p>\n
Setiawati was speaking of the imposition of value-added tax on
\ncigarettes, liquor and automotive products, as well as luxury
\nsales tax, by the Batam Industrial Development Authority and its
\neffect on vendors and traders.<\/p>\n
The new taxes were imposed on Jan. 1 under Government
\nRegulation No. 63\/2003 on value-added tax and luxury sales tax
\nfor Batam industrial zone, Riau Islands province.<\/p>\n
The government enacted the regulation to ensure that only
\nexport-oriented industries would be exempt from customs duties
\nand taxes, and to prevent the influx of foreign goods through
\nBatam.<\/p>\n
Although value-added tax is placed on only three commodities,
\nthe prices of many other imported goods on Batam have also
\nincreased unaccountably.<\/p>\n
For example, a 75 ml bottle of Bulgari perfume used to sell
\nfor Rp 180,000 to Rp 250,000 before January, but is 30 percent
\nmore expensive now.<\/p>\n
Data from the Batam Statistics Agency shows that consumer
\nspending during the seven months to July had declined steadily.<\/p>\n
An official with the agency, Mangamputua Gultom, said the
\nprice increase for consumer goods, such as household appliances
\nand apparel, to which the introduction of the new taxes partly
\ncontributed, had discouraged people from spending.<\/p>\n
He called on the government to revoke the new tax policy;
\notherwise, traders and their businesses would face a dismal
\nfuture.<\/p>\n
\"The low spending has dealt a severe blow to traders and will,
\nin the long run, threaten their existence,\" Mangamputua said.<\/p>\n
The impact of the new taxes was also felt by hotel operators,
\nwho said occupancy rates had fallen during the first semester.<\/p>\n
Anas, president director of Novotel Batam hotel managing firm
\nPT Graha Seraya Pratama, told The Jakarta Post that over the last
\neight months, the hotel's occupancy rate hovered between 40
\npercent and 50 percent, from 60 percent to 80 percent in the
\nmonths preceding the imposition of the new taxes.<\/p>\n
\"Batam has been synonymous with affordable imported goods, but
\nthe government's unpopular tax policy has increased their prices.
\nBatam is no longer a haven for shoppers, and this has adversely
\naffected hotel occupancy rates,\" he said.<\/p>\n
Anas said the introduction of the taxes had only aggravated
\nthe hotel industry's woes since the Severe Acute Respiratory
\nSyndrome and bird flu scares.<\/p>\n
\"Investors are still uncertain as to whether to invest in
\nBatam or not, and the introduction of value-added tax and luxury
\nsales tax have added to the confusion,\" he said.<\/p>\n
A similar grievance was aired by Abidin from the Batam chapter
\nof the Indonesian Employers Association (Apindo), who said the
\nimplementation of the new taxes would raise living costs.<\/p>\n
\"The high living costs will, in turn, prompt a hike in
\nworkers' minimum wage, which will not be beneficial for
\nemployers,\" Abidin said.<\/p>\n
He said a major factor that attracted investors to Batam was
\nits cheap labor. \"If the minimum wage is no longer attractive,
\nthey will leave Batam,\" he said.<\/p>\n
Current minimum wage on Batam is only Rp 602,000, far below
\nthe minimum living cost of Rp 800,000.<\/p>\n
The Batam municipal administration will begin deliberating a
\nnew minimum wage next month, taking into consideration that
\nworkers would be subject to the new taxes and would face higher
\nexpenses for basic needs.<\/p>\n
The local government was apparently powerless to stop price
\nhikes in other goods, although Batam Mayor Nyat Kadir called on
\ntraders in March not to raise the prices of consumer goods except
\nfor liquor, cigarettes and automotive products.<\/p>\n
\"We will take market measures to control the price hikes,\" he
\nsaid.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/taxed-batam-no-shoppers-lure-1447893297",
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