JAKARTA (TheInsiderStories) – Head of the Fiscal Policy Office for Ministry of Finance (MoF) Suahasil Nazara projected Indonesian import growth could be reduced by 11 percent by the end of 2018.
One of the driving factors was the weakening of the Rupiah and series of policies carried out by the government, he said. In the second quarter of this year, Nazara explained, the country’s import growth at 15.17 percent.
For next year, he believed Indonesian import growth to be even lower to 7.1 percent. Nazara stated, “In 2019, imports continued to grow positively and could be lower than this year.”
The Indonesian government has released series of policies to lowered import costs and current account deficit (CAD). On Sept. 10, government decided to raised the value tax of Article 22 for 1,147 imported commodities to 7.5 percent to 10 percent from the original rate around 2.5-10 percent.
Finance Minister Sri Mulyani Indrawati said, this policy is taken to address CAD which is currently rated by the economist could disrupt the Indonesian economy if not addressed. Bank Indonesia reported, last July Indonesia’ CAD recorded US$8 billion, or 3.09 percent of the total gross domestic product.
“The government will be all out to issue all policy instruments to balance our current account deficit back in neutral because the global situation un-muted and the capital inflow came again,” the minister said.
Indrawati has has signed the new Finance Minister Regulation and will effective starting next week. This rule change was made after an evaluation on the ministerial rule PMK 132/PMK.010/2015, PMK 6/PMK.010/2017 and PMK 34/PMK.010/2017 on Income Tax Collection Article 22.
Meanwhile, Ministry of Industry Arilangga Hartarto added, the government will continue to encourage the export of Indonesian commodities such as food, palm oil, chemical, metal (steel), rubber goods, car, and as well as clothing and footwear.
Enggartiasto Lukita, the trade minister stressed it, that his ministry will issue an import regulation for steel, food, alcohol drink and natural resources. Trade ministry will issue a ministerial regulation which requires importers using letters of credit (L/C) when engaging in import operations.
“To seal the document import regulation that we change from the border post had become border through Bonded Logistics Center.,” He explained.
The government also plans to relax the export permit for coal, crude and semi-finished rattan to increase foreign exchange earnings. It also will continue to accelerate economic cooperation such as the Indonesia-Australia Comprehensive Economic Partnerships Agreement will be signed in November. As for the PTA, EFTA, RCEP is expected to be finalized this year and could be implemented next year.
Further negotiations on the Generalized System of Preferences facility with United States, he added, is in the final process. “Hopefully it can get the GSP,” said the trade minister.
The policy of import control is not a new policy was first implemented by the Government. The government never imposed a similar policy in 2013 and 2015.
In 2013, the Government published the ministerial regulation Number 175/PMK.011/2013 also in order to control the imports after Taper Tantrum. At that time, the government raised income tax rates Article 22 on 502 commodity items of consumption from 2.5 percent to 7.5 percent.
In 2015, the government continued this policy by issuing regulation number 107/PMK.010/2015. Through the regulation, government raised income tax rates Article 22 on 240 commodity items of consumption from 7.5 percent to 10 percent on certain consumer goods were abolished sales tax on luxury tax.
Payment of Income Tax Article 22 Income Tax is a payment in advance which can be credited as part of the payment of income tax payable at the end of the tax year. Therefore. 22 Income tax rate increase, in principle, will not burden the manufacturing industry.