Indonesia - Increase Of Import Duties For Finished Products - Would It Be Beneficial?

4 August, 2015

I. Introduction

On 8 July 2015, the Minister of Finance issued Regulation No. 132/PMK.010/2015 ("2015 Regulation") on the Third Amendment to Regulation of the Minister of Finance No. 213/PMK.001/2011("2011 Regulation") on Stipulation of the Classification System of Goods and Import Duty on Imported Goods, which was twice amended by Regulation of the Minister of Finance No. 133/PMK.011/2013, and Regulation of the Minister of Finance No. 97/PMK.010/2015, which became effective on 23 July 2015 ("Effective Date").

II. Summary of Content

The 2015 Regulation amends import duties that are stipulated under Annex III of the 2011 Regulation. The new import duties apply to all imported goods if the customs office issued a registration number and date for the import declaration documentation of the imported goods after the Effective Date. Please see a summary of some imported goods that are affected by the new import duty in Annex 1.

III. Impact and Aftermath

Effectively, the 2015 Regulation raises import duties on consumer goods, food and vehicles ranging from 10 to 150 percent. Sources at various ministries share that the increase of the import tariff is based solely on the national interest and the objective is to support local industries. This is still consistent with the previous understanding on the background of issuance of, and changes and adjustments to, export/import regulations in the past 3 years.

As background, some of the previous regulations on import duties applied higher tariffs to raw materials than to finished products, which appears to create a disadvantage for the local industry.

It remains to be seen what the final economic impact on (end) consumers will be as there is likely to be an increase of product price, which may lead to a decrease of the consumers' purchase power. Another impact that could arise is an increase of smuggling to avoid payment of high duties during the official customs clearance. Consistency of legal enforcement against smuggling may be put to further tests.

From the logistic point of view, this may be an appropriate time for business actors to revisit their current supply chain structure in order to minimize the risk due to the possible decrease of profit, e.g. to take benefit from the applicable free trade agreements.

Annex 1

Corporate and Trade

No.	Two Digit HS Code* *to conduct customs clearance the importer will need to submit 10 digit HS Code	Summary of Description of Goods	Before	After	Remarks
Food and Beverages
1.	Post 09.01	Coffee, whether or not roasted or decaffeinated, coffee husk and skins, coffee substitutes containing coffee in any proportion.	5%	20%
2.	Post 09.02	Tea, flavored and non-flavored.	5%	20%
3.	Post 16.01	Sausages and similar products, of meat, meat offal or blood; food preparations based on these products.	5%	30%
4.	Post 16.04	Prepared or preserved fish; caviar substitutes prepared from fish eggs.	5-10%	15- 20%	For instance: the import duty for salmon has increased from 5% to 15%. The import duty for sardines in airtight containers and in other forms have both increased to 15% from 10 % (in airtight containers) and 5% (in other forms).
5.	Post 16.05	Crustaceans, mollusks, and other aquatic invertebrates, prepared and preserved.	5%	15%	For instance: the import duty for crab, shrimps, prawns, lobster, oysters, abalone, scallops, clams and octopus has increased from 5% to 15%.

6.	Post 17.04	Sugar confectionery (including white chocolate), not containing cocoa.	10%	15- 20%	For instance: the Import duty for both chewing gum and white chocolate has increased from 10% to 20%. The import duty of medicated pastilles and drops has increased from 10% to 15%.
7.	Post 18.06	Chocolate and other food preparations containing cocoa.	5-10%	15- 20%	For instance: the import duty for cocoa powder from 10% has increased to 15%.
8.	Post 19.02	Pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared, such as Spaghetti, Macaroni, Noodles, Lasagne, Gnocchi, Ravioli, Cannelloni, Couscous, whether or not prepared.	5-10%	20%	For instance: the import duty for uncooked pasta has increased from 5% to 20% and the import duty of instant vermicelli has also increased from 10% to 20%.
9.	Post 19.05	Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containi.ng cocoa; communion wafers, empty cachets of a kind that suitable for pharmaceutical use, sealing wafers, rice paper and similar products.	5%- 10%	20%	For instance: the import duty for sweet biscuits, including waffle and wafer has increased from 10% to 20%, and the import duty of unsweetened biscuits has increased from 5% to 20%.
10.	Post 21.03	Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard.	5%	15%	For instance: the import duty for chili sauce, soy sauce and tomato ketchup has increased from 5% to 15%.
11.	Post 21.05	Ice cream and other edible ice, whether or not containing cocoa.	5%	15%

12.	Post 22.02	Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored, and other non-alcoholic beverages, not including fruit or vegetable juice of heading 20.09	5%	10- 20%	For instance: the import duty for soya milk drinks has increased from 5% to10%. The import duty for other non- aerated beverages ready for immediate consumption without dilution has increased from 5% to 20%.
13.	Post 22.04	Wine of fresh grapes, including fortified wines,: grapes must other than that of heading 22.09	Rp. 55,000 /liter	90%
14.	Post 22.08	Un-denatured Ethyl alcohol strength by volume of less than 80% vol.; spirits, liqueurs and other spirituous beverages	Rp. 125,00 0/liter	150%	For instance: the import duty for brandy, whisky, vodka, rum and other spirits obtained by distilling fermented sugar-cane products and other liqueurs has increased from Rp.12,500/liter to 150% of the imported price.
Health and Beauty
15.	Post 33.04	Beauty or make-up preparations and preparations for the care of skin (other than medicaments), including sunscreen or sun tan preparation; manicure and pedicure preparations.	10%	15%	For instance: the import duty for lip make-up, eye make-up and powders has increased from 10% to 15%.
16.	Post 33.05	Preparations for use on the hair.	10%	15%	For instance: the import duty for shampoo, preparations for permanent waving or straightening, and hair lacquers has increased from 10% to 15%.

17.	Post 33.06	Preparations for oral or dental hygiene, including denture fixative pastes and powders; yarn used to clean between the teeth (dental floss), in individuals retail packages.	5-10%		10- 15%	For instance: the import duty for toothpaste has increased from 10% to 15%, and the import duty for dental floss has increased from 5% to 10%.
18.	Post 34.01	Soap, organic surface-active products and preparations for use as soap, in the form of bars, cakes, molded pieces or shapes, whether or not containing soap; organic surface- active products preparations for washing the skin, in the form of liquid cream and put up for retail sale, whether or not containing soap; paper, wadding, felt and nonwovens, impregnated, coated, or covered with soap or detergent.	5-10%		10- 15%	For instance: the import duty for bath soap has increased from 10% to 15%. Import duty for soaps in the other forms has increased from 5% to 10%.
Households Appliances
19.	Post 39.02	Baths, shower baths, sinks, wash-basins, bidets, lavatory pans, seats and covers, flushing cisterns and similar sanitary ware of plastics.		10%	15%
20.	Post 39.24	Tableware, kitchenware, or other household articles and hygienic or toiletries, of plastics.		15%	20 – 22.5 %	For instance: the import duty for Kitchenware and tableware made of melamine has increased from 15% to 20%. The import duty for other plastic form of kitchen and tableware has increased from 15% to 22.5%

21.	Post 44.20	Wood marquetry and inlaid wood, caskets and cases for jewelry or cutlery and similar goods of wood, ornaments of woods, wooden goods or furniture not falling in Chapter 94.		5%	25%
22.	Post 57.02	Carpets and other textile floors coverings, woven, not tufted or flocked, whether or not made up, including: "Kelem", "Schumacks", "Karamanie" and similar hand-woven rugs.		15%	22.5 – 25%	For instance: the import duty for wool prayer rugs has increased from 15% to 22.5%.
Pharmaceuticals
23.	Post 40.14	Hygienic or pharmaceutical articles (including teats) of vulcanized rubber other than hard rubber, with or without fittings or other hard rubber.	5%		10%	For instance: the import duty of condom, teats for feeding bottles or similar articles, or stoppers for pharmaceutical use has increased from 5% to 10%.
24.	Post 40.15	Article of apparel and clothing accessories (including gloves, mittens and mitts) for all purposes, of vulcanized rubber other than hard rubber.	5%		10%	For instance: the import duty for surgical gloves or lead aprons has increased from 5% to 10%.
Apparel and Fashion
25.	Post 42.02	Trunks, suit-cases, vanity-cases, executive-cases, brief-cases, school satchels, spectacles cases, binocular cases, camera cases, musical instrument cases, gun cases, holster and similar containers; traveling bags, insulated foods and beverages bags,	10-		15- 20%	For instance: the import duty for handbags with outer surface of leather or composition of leather has increased from 10% to 15%. The import duty for handbags with outer surface of plastic sheeting or of textile materials has increased from

		toilet bags, rucksacks, handbags, shopping bags, wallets, purses, map-cases, cigarette cases, tobacco cases, travelling bags, tool bags, sport bags, bottle cases, jewelry boxes, powder boxes, cutlery cases and similar containers, of leather, sheeting plastic, textile materials, or vulcanized fiber or paperboard, wholly or mainly cover with such material or with paper.			15% to 20% The import duty for school satchels with outer vulcanized fiber has increased from 15% to 17.5%.
26.	Post 61.03	Men's or boys' suits, ensembles, jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted.	10%-	20%- 25%	For instance: the import duty for jackets of wool or fine animal hairs has increased from 10% to 20%. The import duty for suits, ensembles, and jackets made of cotton, synthetics fiber or other textile materials has increased from 15% to 25%.
27.	61.04	Women's or girls' suits, ensembles, jackets, blazers, dresses, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted.	10%-	20%- 25%	For instance: the import duty for jackets of wool or fine animal hairs has increased from 10% to 20%. The import duty for suits, ensembles, and jackets made of cotton, synthetics fiber or other textile materials has increased from 15% to 25%.

28.	61.10	Jerseys, pullovers, cardigans, waistcoats and similar goods, knitted or crocheted.	15%	20%- 25%	For instance: the import duty for jerseys, pullovers, cardigans, waistcoats and similar goods, knitted or crocheted of wool or fine animal hairs has increased from 15% to 20%. The import duty for any of the above goods that are made of cotton, fiber or textile materials has increased from 15% to 25%.
29.	Post 61.11	Babies' garments and clothing accessories, knitted or crocheted.	15%	25%
30.	Post 61.17	Other made up clothing accessories, knitted or crocheted parts of garments or of clothing accessories.	10%- 15%	20%- 25%	For instance: the import duty for shawls, scarves, mufflers, mantillas, veils and the like has increased from 15% to 25%. Import duty for wristbands, knee bands and ankle bands has increased from 15% to 22.5%. Import duty for ties, bow ties and cravats of wool or fine animal hair has increased from 10% to 20%.