JAKARTA: Indonesia has raised import tariffs on food, clothes and many other consumer goods in a move to help domestic producers, though economists said it would fuel inflation and noted firms faced bigger problems than foreign competition.
Indonesia’s economy is growing at its slowest pace for nearly six years – just 4.71% annually in the first quarter – and is struggling to develop new engines of growth to counter the weakness of the commodity sector.
Suahasil Nazara, head of the finance ministry’s fiscal policy office, told Reuters that the increased tariffs were “meant to push local industry”.
Officials said that the new measures were consistent with World Trade Organisation rules.
“This isn’t a protectionist measure,” said Bachrul Chairi, director-general of international trade cooperation at Trade Ministry. “We raised them (tariffs) based on our national interest and it does not violate the rules.” The new tariff on cars was fixed at 50%, from a range of 10% to 40% previously.
Duty on imported tea and coffee was raised to 20% from 5%, and the tariff on meat was raised to 30% from 5%. Imports of whiskey, brandy and other liquors are now subject to duty of 150%. Previously, the duty was 125,000 rupiah (US$9.34) per litre.
Tariffs were also raised for many other goods, including food and beverages, clothes, condoms, carpets and air conditioners, putting upward pressure in inflation, which rose to 7.26% in June.
