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