The Indonesian government has raised import tariffs on food products, apparels, and many other consumer goods in order to help local consumer goods producers. However, many economists fid it not fit for Indonesian economy as it would trigger inflation.
As of now Indonesian economy is at its lowest, expanding at only 4.71% annual rate in the first quarter. The economy is struggling to develop new engines for growing so as to counter the weakness of the Indonesian commodity industry.
The head of the fiscal policy office, Ministry of Finance, Indonesia, Mr. Suahasil Nazara, have stated that the rise in tariffs are meant to propel domestic industry. Other officials stated that the new measures are in line with the rules of World Trade Organization.
Mr. Bachrul Chairi, the director general of ITC at the Ministry of Trade, stated that this is not a protectionist measure and they raised the tariff based on their national interest without violating the rules.
The new tariff is fixed at 50% on cars, which was previously at a range of 10% to 40%. The import tariff on tea and coffee are being raised to 20% from 5%, and the tariff on meat has been risen from 5% to 30%.
Import duties of brandy, whiskey, and other liquors have now raised to 150%. In past, the duty was USS$12.73 per liter. The chairman of food and beverage association of Indonesia, Mr. Adhi Lukman, welcomed the changes, stating that in past the imports duties for raw materials such as sugar were higher than finished products such as candies. It was harmful for local business.