Translation in English: Indonesia clarifies that the "200% import tariff" is not
Indonesia's Minister of Maritime Affairs and Investment Coordination, Luhut Binsar Pandjaitan, clarified on July 5th the speculations regarding "200% import tariffs." He stated that this measure is not targeted at any specific country, and certainly not at China.
Previously, Indonesia's Trade Minister Zulkifli Hasan indicated that Indonesia would impose safeguard tariffs ranging from 100% to 200% on imported products such as shoes and ceramics, reinitiating plans to protect domestic industries. There have been interpretations that Indonesia's stance is more aimed at Chinese products.
Spokesperson for the Ministry of Foreign Affairs, Lin Jian, said on July 11th during a routine press conference, "We have taken note of the relevant reports, especially the clarifications made by Minister Luhut and Minister Zulkifli regarding 'Indonesia imposing high tariffs on imported goods from China.' China will closely monitor any subsequent imposition of safeguard tariffs by Indonesia on specific products and take necessary measures to protect the legitimate rights and interests of enterprises."
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Zhou Shixin, Director of the Southeast Asia Research Center at the Shanghai Institutes for International Studies, told Yicai Global that Chinese and Indonesian enterprises are not simply in a competitive relationship; they have deeper cooperation in the industrial chain.
He further analyzed that it is necessary for China and Indonesia to maintain dialogue, alleviate each other's concerns, and further promote trade exchanges.
Indonesia's Intention to Impose Additional Tariffs
Zulkifli Hasan first stated on June 28th that additional safeguard tariffs would be imposed on some imported goods, with tax rates expected to be between 100% and 200%. This could involve industries such as shoes, clothing, textiles, cosmetics, and ceramics. The significant increase in tariffs is intended to protect domestic industries.
According to data from the Indonesian Bureau of Statistics, Indonesia mainly imports clothing and apparel accessories from China, Vietnam, and Bangladesh. Therefore, products from these countries may become the primary targets of Indonesia's new tariff policy. This statement has not only attracted the attention of Chinese exporters but also caused concern among Indonesian importers.
In response to various misunderstandings and speculations, Luhut said on the 5th, "Indonesia will not simply follow some countries, although we must protect our national interests. Therefore, the issue of imposing a 200% tariff on China needs to be clarified to avoid disputes and misunderstandings by our partners." The government is deeply studying this policy to ensure that it can fit the specific conditions and needs of domestic industries.
Luhut introduced that on June 25th of this year, Indonesian President Joko Widodo chaired a coordinating meeting and decided to protect domestic industries in accordance with existing regulatory provisions and applicable international trade norms. One of the measures is to implement safeguard tariffs on several types of textiles, but "this tariff has actually been implemented." Luhut stated that this measure applies to all imported goods, without distinguishing specific countries of origin.Luhut further emphasized that China is a very important strategic partner for trade and investment for Indonesia. Indonesia hopes to ensure good relations with partner countries, prioritizing mutual trust, mutual respect, and the principle of complementarity. Especially under uncertain global conditions, it is even more necessary to work together.
Background of Increased Tariffs
In September 2023, Indonesian President Joko ordered a rectification of e-commerce platforms, followed by the issuance of Trade Ministerial Decree No. 36 of 2023 by Indonesia. Through quotas and technical licensing, the regulation of imports of products such as textiles and garments, shoes, bags, cosmetics, toys, and electronic products was strengthened.
This new regulation came into effect in March of this year, causing a backlog of 26,000 containers at Jakarta and Surabaya ports by May. To alleviate port congestion and address domestic operators' complaints about raw material shortages, the Indonesian government has repeatedly adjusted policies, easing import restrictions, which has triggered a backlash from related industries within Indonesia.
According to the latest report from the Indonesian Statistics Bureau, in the first quarter of this year, the import value of knitted and non-knitted garments and clothing showed an increasing trend, from $12.26 million (approximately 88.94 million RMB) in January, to $20.87 million (approximately 151.4 million RMB) in February, and further increased to $23.98 million (approximately 174 million RMB) in March.
In this context, industry associations such as the Indonesian Textile Association began to complain to the Indonesian government, stating that over the past two years, 21 textile factories have closed down and a large number of textile workers have been laid off, claiming that the reason is the influx of a large amount of foreign textiles into the Indonesian market. Therefore, the Indonesian government needs to balance between different business interest groups.
Zhou Shixin told the First Financial reporter that some industries in Indonesia are less competitive, but as many Chinese companies develop locally in Indonesia, they have provided many opportunities for local enterprises in industry upgrading and industrial chains. It is necessary for China and Indonesia to continue communication and dialogue against the backdrop of rapidly growing bilateral trade.
China is Indonesia's largest trading partner, the largest export destination, and the largest source of imports. According to Chinese statistics, in 2023, the bilateral trade volume between China and Indonesia reached $139.42 billion, with China importing $74.22 billion and exporting $65.2 billion. Indonesia plans to increase its export target to China to $65 billion to $70 billion in 2024.