Policy on 200% Import Tariff and Domestic Industry Protection

Jakarta, INTI - Coordinating Minister for Maritime Affairs and Investment (Menko Marves) Luhut Binsar Pandjaitan provided an explanation regarding the planned policy of imposing a 200 percent import tariff, which has raised various questions and speculations. This policy aims to protect the domestic industry amidst global geopolitical uncertainties, particularly due to tensions between the United States (US) and the European Union with China and Russia.

"This is a very important reference, because Indonesia does not want to merely follow other countries if it is contrary to Indonesia's national interest," emphasized Menko Luhut.

At the Limited Coordination Meeting (Rakortas) led by President Jokowi on June 25, 2024, it was decided to protect the domestic industry in accordance with existing regulations and applicable international trade norms. These protective measures must address the root causes of the issues. One of the measures taken is the implementation of a Safeguard Tariff for certain textile products, which has already been in place and is currently undergoing an extension period. This safeguard is applied to all imported goods regardless of their country of origin.

"I have also communicated with the Minister of Trade to discuss this issue. We agreed to prioritize our national interest without neglecting partnerships with friendly countries," stated Menko Luhut.

Import Supervision and Domestic Market Protection

Furthermore, Menko Luhut mentioned that the President has requested tighter supervision of imports, especially second-hand clothing or smuggled goods entering Indonesia. This is necessary due to indications of second-hand clothing and smuggled goods disrupting the domestic market. The government is also open to investigating unfair trade practices, such as dumping, from any country.

"We are not targeting any specific country, especially China. All actions are taken based on our national interest. This needs to be thoroughly reviewed to ensure that the policies implemented truly align with the conditions and needs of the domestic industry," he added.

Relations with China and Strategic Partnership

China is one of Indonesia's most important comprehensive strategic partners in terms of trade and investment. Indonesia is committed to maintaining this good relationship by continuing to communicate and dialogue regarding policy measures between the two countries.

"We want to ensure that Indonesia's good relationship with partner countries continues to uphold the principles of mutual trust, respect, and complementarity. I fully understand that strategic partnerships with friendly countries are partnerships in solidarity, especially in the uncertain global situation like during the handling of COVID-19," said Menko Luhut.

According to data from the Central Statistics Agency (BPS), imports of textiles and textile products (TPT) increased by 5.7% in 2023 compared to the previous year. This increase was driven by high domestic demand but also posed a threat to the local TPT industry. The imposition of this import tariff is expected to provide stronger protection for the domestic industry and encourage increased local production.

Additionally, data from the Ministry of Trade shows that imports of second-hand clothing increased by 8% in 2023. This underscores the need for stricter supervision to protect the domestic textile industry from unfair trade practices and smuggled goods.

With the various measures taken, the Indonesian government strives to balance protecting national interests and fostering strategic partnerships with other countries. The policy of imposing a 200 percent import tariff is part of this effort, with the hope of positively impacting the economy and domestic industry.