JAKARTA: A number of retail companies are reviewing the possibility of increasing imports from Indonesia’s free-trade partners to compensate import tax rises recently imposed by the government.
Trisula International president director Lisa Tjahjadi said on Tuesday that her firm would look into countries that have signed free-trade agreements with Indonesia to avoid significant impact from the import tariff hike.
“We will review that possibility,” she told The Jakarta Post when asked if Trisula would import more from Indonesia’s free trade partners.
Indonesia has a total of 17 free trade arrangements, with nine already signed and in effect, one signed but not yet in effect and seven still in negotiations, according to data from the Asian Development Bank (ADB).
Countries or regions that have signed and implemented free trade deals with Indonesia include ASEAN, Japan and Pakistan.
The deals allow low import duties for partner countries’ goods entering Indonesia and vice versa.
Within the ASEAN Free Trade Area (AFTA) for example, over 99 percent of products listed in the common effective preferential tariff of Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0 to 5 percent tariff range, the AFTA Council’s data has shown.
Lisa said that many of her firm’s current imported raw materials were not from Indonesia’s free-trade partners, hinting that they were subjects for import tariff rises.
Trisula, which manufactures and sells global clothing brands such as Jack Nicklaus and G2000, sources around 60 percent of its raw materials overseas, according to Lisa.
In a separate development, fashion and lifestyle retailer Mitra Adiperkasa (MAP) is reportedly in negotiations to increase imports from Indonesia’s free trade partners to minimize effects of the import tariff hike, according to an analyst with Mandiri Sekuritas, Matthew Wibowo.
However, the tariff hike itself would not significantly affect the firm’s operational costs as around 45 percent of MAP’s imported products were currently from the country’s free trade partners, he said in a recent report.
Matthew also argued that MAP’s various product assortment and upper-middle class consumers would be beneficial for the company despite possible gradual average price rises.
MAP’s corporate secretary Fetty Kwartati told the Post in a recent text message that her firm would make pricing strategy adjustment in regards to the import duty hike.
Lisa said, meanwhile, that the import tariff rises would definitely increase her firm’s import costs, but she was upbeat that the impact on the firm’s business would remain manageable.
Reza Priyambada, an analyst with NongHyup Korindo Securities Indonesia, however, warned the government to provide support to boost production and quality of local products.
“While the new regulation is aimed at increasing local product consumption, it should not be forgotten that local manufacturers need to ensure sufficient supply of quality products as demands for local products might be on the rise once the new regulation comes into effect,” he said.
The government, through Finance Ministry Regulation No. 132/2015 signed on July 8, increases the import duties on consumer goods from textile products to alcoholic drinks, with increases ranging from 10 to 150 percent.
