Indonesia's Import Duty Hike to Boost Revenue by Rp 800b, Official Says


JULY 27, 2015

Women eat bowls of noodles for lunch in Jakarta. (Reuters Photo/Enny Nuraheni).

Jakarta. Indonesia's hike in import duty for consumer goods will bring in an additional 800 billion rupiah ($59.42 million) in the second half of 2015, but this is only a small part of the full-year revenue target, a finance ministry official said on Monday.

Southeast Asia's largest economy last week raised import tariffs on food, clothes, and many other consumer goods to help domestic producers, in a move the government has repeatedly denied was a protectionist measure.

"This isn't a policy to boost revenue," Suahasil Nazara, the head of the ministry's fiscal policy office, told reporters, adding that the increase was small, compared with the 2015 revenue target of 1,761.6 trillion rupiah.

The government was using the tariff as an instrument to boost the growth of domestic industry, the official added.

"We are facing a challenge in our industrialization," Nazara said.

"Our domestic industry hasn't expanded as fast as it had 15 to 20 years ago."

The finance ministry has said it could miss its tax revenue target by Rp 120 trillion rupiah this year, because of slow economic growth. By June, it had reached less than 40 percent of the target.

The tariff hike will affect about one percent of all imports, Nazara said, ensuring near zero inflationary pressure from the policy.

Inflationary pressures will also be small because the rule exempts Indonesia's trade pact partners, said Haris Munandar, head of industrial research at the industry ministry.

The agreements with such partners, for example, other southeast Asian nations, set zero tariffs on imports.