Image Credit : Bali Provincial Government

JAKARTA (TheInsiderStories)Indonesian government plans to remove import tariff on the yacht in an attempt to boost revenue from the tourism sector that will increase reserve exchange.

Tourism Minister Arief Yahya delivered the import tariff cut plan on the yacht to the coordination meeting with the Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan on Monday (23/07).

Panjaitan said the tariff cut will make the yacht business easier and more attractive to visit Indonesia. It brings foreign tourist and will increase foreign exchange.

According to the Ministry of Finance regulation Number 35/PMK.010/2017, the import tariff on the yacht set at 75 percent as it categorized as luxury goods. The meeting agreed to cut the import tariff to 0 percent.

Yahya said the import tariff cut potentially increase five times the revenue from tourism sector to US$442.450 million from current US$80.540 million. In addition, he claimed the import tariff cut will increase revenue from the standard duty and operational maintenance up to US$350 million.

Investment Coordinating Board Head Thomas Lembong added the deregulation could be a strategy to boost Indonesia’s tourism development, one of the main focus in the President Joko Widod leadership. This regulation will also bring more tourists to Indonesia.

“In Langkawi (Malaysia), Phuket (Thailand), the yacht charter have become a holiday option not only among the upper class but also the middle class,” he added in a press release.

As known, the Indonesian government put more effort into the tourism sector as a strategy to boost the foreign exchange in an attempt to maintain the rupiah exchange rate against US dollar. Indonesia only has limited ability to generate the foreign exchange reflected in the persistent high current account deficit that exacerbates by the trade balance deficit.

Indonesia record US$5.5 billion or 2.15 percent of gross domestic product (GDP) in current account deficit in the first quarter this year, according to the Bank Indonesia data. In addition, Bank Indonesia‘s Senior Deputy Governor Mirza Adityaswara earlier saw the current account deficit is seen around 2.5 per cent to 3 per cent of GDP, possibly putting more pressure on the rupiah.

The higher current account deficit in the second quarter of this year is triggered by the persistent trade balance deficit that recorded US$1.02 billion from January to June 2018, according to the Central Statistics Agency data. Export in January to June 2018 reached US$88.02billion or increase 10.03 per cent (year to year), lower than the import that reached US$89.04 million or increased 23.10 per cent (year to year).

The condition added more pressure on the rupiah exchange rate against US dollar. Rupiah exchange rate weakened 6.93 percent against US dollar from January 2018 to July 20, 2018. It was higher than its regional peers in Southeast Asia namely Malaysia, Vietnam, and Thailand that weakened 0.38 percent, 1.52 percent, and 2.60 percent, respectively.

Rupiah exchange rate opened up 28 points or 0.19 percent at Rp14.517 per US$1 in today (25/07) trading session. Rupiah weakened 63 points or 0.44 percent at Rp14,545 per US$1 at 15.35 WIB yesterday (24/07), according to Bloomberg. The rupiah was the weakest among other currencies in the Asian region in which majorities moved lower, followed by the South Korean won which fell 0.35 percent.