The government has accelerated the planned revision of import duties for certain group of products to help protect Indonesia’s real sector from the negative impact of the global economic crisis, the Finance Ministry said in a statement Friday.
According to the statement, the government has revised import duties on 35 product classifications, including on raw materials for the beverage and chemical industries, (duties reduced) as well as on processed goods for the beverage and metal industries (duties increased).
These changes in import duties were to be implemented in 2010, in line with the Indonesian Import Duty Harmonization Program.
But as the impact of the global economic slowdown has now begun to hit home harder, the government has been forced to act earlier.
“The consideration is that if we changed the import duties on the original schedule, our industry could be in trouble. But in general (for other tariff classifications) we will follow the orginal schedule,” said Anggito Abimanyu, the ministry’s head of fiscal policy.
The Finance Ministry said that for imported raw materials used by domestic industries, the varied import duties were lowered to help cut local business costs.
These included raw materials for the beverage industry, chemical industry and silver craft industry.
Meanwhile, the government has raised import duties on processed goods for several industrial sectors, including beverages, chemicals, the metalwork industry and agricultural machinery, in cases where products could be produced domestically.
“There is the need for temporary protection so that domestic industries can grow,” said Anggito. Most domestic industries, in particular export-oriented ones, have been hit by the adverse global economic conditions.
A decline in demand and a weakening rupiah against other currencies have only made the situation worse.
Most exporters here have to import raw materials and components needed for their products. Sofjan Wanandi, the chairman of Indonesian Employers Association (Apindo), said export demand since January had dropped by 15 to 20 percent on average.
“There are even some companies whose demand has dropped by 40 percent,” he said. According to the Central Statistics Agency (BPS) data, Indonesia’s exports have been declining since November last year.
And the outlook for exports for 2009 is already bleak and seems to be getting more gloomy with the January non oil exports plummeting by around 46 percent.
According to the Finance Ministry, the changes in import duties are, however, in line with the Most Favored Nation (MFN) clause, the cornerstone of WTO trade law.
The MFN clause generally means treating all WTO members equally. If a country lowers a trade barrier
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