Indonesia: Attention, shoppers: New regulation on imported goods to take effect Jan. 30

Online shoppers, prepare. The government is set to implement a new import regulation that will lower the maximum value of tax-free imported goods at the end of this month.

Finance Ministerial Regulation (PMK) No.199/2019 sets the maximum value of non-taxable imported goods at US$3 per shipment, far lower than the current $75.The new regulation will take effect on Jan. 30.

The taxable goods will be subject to an import duty of 7.5 percent and a value-added tax of 10 percent. Previously, importers would pay a 10 percent income tax in addition to the import duty and value-added tax.

With the revision, total taxes that have to be paid will be only 17.5 percent instead of the previous 27 percent.

“This is to create a level playing field between domestic products, which mostly come from small and medium industries, and imported products,” Directorate General of Customs and Excise (DJBC) international and inter-institutional customs director Syarif Hidayat said in a written statement on Tuesday.

However, the new import tariffs will not be applied to bags, shoes or garment products, which will be subject to normal tariffs, as the government is trying to protect local producers, he added.

Customs data shows that retail imports jumped to nearly 50 million items in 2019, compared to 19.6 million items in 2018 and 6.1 million in 2017. Most of the goods were imported from China.

Syarif called on importers and courier services to comply with the rules by refraining from splitting shipments of goods or under-invoicing imported goods.

“With the new rules, we hope that import duty exemption can be truly utilized for personal use,” he said.

Previously, Customs and Excise Director General Heru Pambudi said the new regulation would be enacted to augment the competitiveness of domestic businesses and to protect domestic small and medium enterprises (SMEs) and retailers as imported goods had flooded the country’s market.

“There’s indeed very tight competition that gets worse with the fact that most of the imported goods coming into the country are not subject to import duties,” he said in December as reported by Kontan.

The new regulations have received backlash from internet shoppers. Local K-pop fans, who regularly purchase merchandise and albums from sellers abroad, voiced their protests on social media platforms.

“Importing K-pop goods won’t harm local industry, since we cannot find official [K-pop] album producers. Not every imported good will harm local sellers. Are you saying that I have to pay a tax for buying one album?” a user tweeted in reply to the Customs and Excise Office’s Twitter account in December.

However, e-commerce platform Tokopedia chief executive officer William Tanuwijaya welcomed the policy, saying it was intended to reduce the country’s worsening trade deficit.

“Other than leveling the playing field for local producers and merchants, this regulation will provide an opportunity for local businesses to import products officially,” he said in December. (mfp)