Indonesia: Lobby groups oppose plan to increase import tax

• Aug 23, 2018

The Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesian Employers Association (Apindo) have opposed a government plan to increase import tax on goods that can be produced locally, saying it could backfire on the economy.

“The Indonesian manufacturing industry is starting to grow. Don’t let [import tax] be counterproductive to efforts to encourage exports,” kontan.co.idrecently reported Kadin deputy chairman for international relationship Shinta W. Kamdani as saying.

The government plans to impose additional import tax of 7.5 percent on goods that have domestic equivalents to reduce the current account deficit. The government is currently reviewing 500 imported items that may be subject to the higher import tax.

Shinta said imposing a higher import tax would push up prices, including consumer goods prices, because raw materials used to produce some consumer goods were imported.

She said such a move could be counterproductive in the government’s effort to access new markets through free trade agreements (FTAs) and to attract more investors.

Apindo deputy chairman Suryadi Sasmita also called on the government to give assurances that the higher import tax would be imposed only on goods that made a slight contribution to economic growth because if was imposed on all goods, it would affect people’s purchasing power.

“Businesspeople still want to sell their goods, while the people want affordable prices,” he said. (bbn)

Source: http://www.thejakartapost.com/news/2018/08/23/lobby-groups-oppose-plan-to-increase-import-tax.html