Indonesia Reduces Import Tax Threshold To Protect Smaller Firms

Indonesia has announced it’s going to reduce the threshold for taxing imported eCommerce consumer goods from $75 to $3, to help control the purchases of cheap foreign goods and help protect smaller Indonesian firms, according to a report by Reuters.

Overseas shipments to the country continue to grow, with eCommerce purchases hitting a milestone of 50 million packages shipped to the country so far this year, compared to 19.6 million last year and 6.1 million a year prior to that. Most of the shipments are from China, according to data from customs. 

“This is to protect firms who’ve been producing goods that are often traded in eCommerce, such as sandals, crafts, and handbags,” said Heru Pambudi, customs director general.

The new regulations will take effect at the end of January 2020 and will affect clothes, bags, shoes and textiles that cost the minimum $3. They’ll be taxed at a rate of 32.5 percent to 50 percent of the item’s value. Other products that aren’t in those categories will see taxes lowered from between 27.5 percent to 37.5 percent of their value, to 17.5 percent.

Anything that’s under $3 will also see taxes, but at a lower range. Pambudi said the new taxes were an answer to calls from local shopkeepers and the general public, and will let local goods go “head to head” with foreign ones, in terms of pricing. 

In other Indonesia news, Indonesia-based Traveloka has partnered with Bank BRI on a credit card for Indonesia’s underbanked.

The travel and lifestyle platform has received investments from the likes of JD.com, Sequoia Capital and Hillhouse Capital, according to Deal Street Asia. Speaking at a conference in Singapore, Traveloka Group of Operations President Henry Hendrawan said the company is working to solve the “pain points” of Indonesians — most notably that many citizens are underbanked.

“Currently many Indonesian consumers are forced to book their flights and hotels last minute due to the lack of credit access typically provided via credit cards,” Hendrawan said. “Many of these users end up paying higher last-minute prices or sometimes are unable to find the airline seat or hotel rooms they want.”