JAKARTA, KOMPAS – Programs to improve export and import performances should be implemented quickly, so the trade deficit will not deepen further to the yearend. The deficit in oil and gas should receive more attention, because it has contributed most to the deepening of the country’s trade deficit.
On the other hand, the surplus in non-oil and gas trade should be increased to offset the sharp rise in non-oil and gas imports.
Based on data from the Central Statistics Agency (BPS), the trade balance from January to July suffered a deficit of US$3.09 billion. The monthly trade balance recorded a surplus only twice this year, in March and June.
In July, Indonesia\'s trade deficit was $2.03 billion. Monthly exports grew 25.16 percent to $16.24 billion in July, while monthly imports grew 62.17 percent to $18.27 billion in the same month.
Speaking at a press conference on Wednesday (15/8/2018) in Jakarta, BPS head Suhariyanto said the sharp increase in oil and gas imports was caused by the surge in world crude oil prices and increased domestic demand during the extended Idul Fitri holiday, and that the significant increase in non-oil and gas imports was caused by increased domestic demand and investment in strategic projects.
"We hope that the government program to increase exports, substitute imported goods, mandatory 20 percent biodiesel blend [B20] and imposing a 7.5 percent income tax on certain import goods will soon be realized,” he said.
Separately, Coordinating Economic Minister Darmin Nasution said the import surge in July was triggered by the extended Idul Fitri holiday, during which trading activities were less active.
Imports in May-June slumped 38 percent because the period had only two working weeks. As a result, entrepreneurs and investors increased imports in July to compensate for the previous month’s decline.
"When calculating imports from May to July, the total value increased only 3.5 percent. Although import growth slowed down, trade remained in deficit," said Darmin.
Regarding the government\'s plan to impose income tax on imported raw materials that could not be substituted domestically and were not categorized as strategic goods, Darmin said the government was still drafting a list.
Short-term programs to be implemented this year include the mandatory 20 percent biodiesel blend in every liter of diesel fuel (B20) beginning Sept. 1 and infrastructure development at tourist destinations. As for the long-term programs, these include increasing the use of local components in manufacturing and imposing import tax on heavy equipment for infrastructure development.
Multiple impacts
The government\'s plan to increase the income tax for certain imported goods to 7.5 percent could have multiple impacts on the economy, which should be clearly identified and detailed.
Center for Indonesia Taxation Analysis executive director Yustinus Prastowo said the government must ensure that the income tax would be imposed only on goods or raw materials that were not available in the domestic market. If not, production costs could double for manufacturing companies.
"Imposing the income tax on imports should not be done in a hurry. It will take time to adjust the policy and for the companies to prepare," he said.
Meanwhile, the Indonesian Chamber of Commerce and Industry (Kadin) held a coordinating meeting on Wednesday afternoon that saw the attendance of about 30 major exporters and importers, along with government officials.
The meeting discussed potential programs to strengthen and stabilize the rupiah. "We appreciate the government’s quick response in dealing with the latest economic situation, which required a joint effort," said Kadin chairman Rosan Perkasa Roeslani.
Regarding the income tax on certain import goods, Indonesian Olefin, Aromatic and Plastics Industry Association (Inaplas) secretary-general Fajar Budiono said that the import tax should be increased according to a priority of goods. "The Import tax should be increased starting from the finished product, then on to other categories," he said.
(HEN/KRN/CAS)
