JCI Takes a Beating From Import Tariff Hike, Sliding Rupiah
Jakarta. Indonesia’s main stock index slipped on Friday as retailers’ stocks tumbled following the government’s decision to increase import duty on consumer goods entering the country.
The Jakarta Composite Index (JCI) lost 0.94 percent to 4,856.6 on Friday, ending the week with a 0.3 percent loss. About 3.4 billion shares worth nearly Rp 4 trillion ($296.6 million) were traded on the Indonesia Stock Exchange (IDX) on Friday. Foreign investors, which made up 43 percent of the trading activity on Thursday, booked a net sell of Rp 123 billion.
Shares in the miscellaneous industry, which consists of automotive distributors and garment makers, took the biggest fall at 2.6 percent, while consumer goods stocks followed with a 1.22 percent drop.
The fall came one day after the Finance Ministry announced a ministerial regulation increasing import duty for consumer goods -- from clothing to snacks and alcoholic beverages -- by between 10 percent and 150 percent.
For instance, the new regulation stipulates that clothes are subject to import duty ranging from 20 percent to 25 percent depending on the item. Previously, most clothing pieces were subject to 15 percent import duty at most.
The highest tariff is subjected to alcoholic beverages that contain less than 80 percent alcohol -- such as brandy and whiskey -- at 150 percent.
“We believe that this is another effort by the government -- after removing the luxury tax last month -- to raise tax revenue from retail products,” Matthew Wibowo, an analyst at Mandiri Sekuritas, said in a memo to investors on Friday.
“From our scope, we think that this regulation will impact [high-end retailer Mitra Adiperkasa] the most, since about 60 percent of its products are imported,” he added.
Shares of Mitra Adiperkasa, a fashion and lifestyle retailer behind the import of brands such as Starbucks Coffee and American clothing line True Religion, fell 6.4 percent to Rp 4,675 on Friday.
Ace Hardware, which sells home improvement products, also saw a decline as its shares fell 3 percent to Rp 640.
“If [the retailer] imports most of its products, it will definitely be effected [by the new regulation]… However, just how much and to what point it impacts sales growth highly depends on the class of the products and the buyers,” Reza Priyambada, an analyst at NH Korindo Securities, said on Friday.
Aside from the import tariff hike, Reza pointed out that the rupiah's continued fall against the US dollar and global negative sentiments have also placed more pressure on the JCI.
The rupiah has depreciated by 8 percent against the US dollar so far this year, reaching 13,448, data from Bank Indonesia showed.
GlobeAsia
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