Ministry Of Finance: The Impact Of Customs-Free US Products On The State Budget Is Not Significant

JAKARTA - Director General of Economic and Fiscal Strategy of the Ministry of Finance (Kemenkeu) Febrio Nathan Kacaribu said that the tariff exemption policy on imported commodities from the United States (US) to Indonesia did not have a significant impact on receiving the State Revenue and Expenditure Budget (APBN).

"It (the impact) is not significant (to the state budget)," he told the media crew when met at the Coordinating Ministry for Economic Affairs, Monday, July 21.

Febrio explained that Indonesia's total import value from the US was only about 2 percent to 3 percent of the total national imports, so the contribution of import duties from the US to state revenues was relatively small.

"We usually make it effective from the US, it's around 2 percent-3 percent, the total is for the tariff, so it's not too big," he said.

Previously, the Indonesian government was still continuing negotiations with the United States Trade Representative Office (USTR) to encourage a reduction in import rates of up to 0 percent.

Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso said that although the reciprocal rate from the United States has been set at 19 percent, there is still room for negotiations for several certain commodities.

Susi explained that Indonesia is working on several superior products such as CPO (crude palm oil), coffee, cocoa, nickel and other agricultural products that can be subject to a 0 percent tariff because it is very much needed by the United States and cannot be produced efficiently there.

"There is still room for negotiations there. There are several of our commodity products whose terms are America's most needed, cannot be produced there, but are very reliable when exported from Indonesia. We negotiate that the tariff is 0 percent," he told the media crew, Friday, July 18.

"We are negotiating so that tariffs for some products can be reduced by 0 percent, because our exports are very reliable and needed by the US market," he added.

Susiwijono explained that of the total 11,552 HS (Harmonized System) tariff posts, around 11,474 posts or 99 percent had been charged a 0 percent import rate to Indonesia.

According to him, this is in line with the free trade scheme which is also applied in the Free Trade Agreement (FTA), Comprehensive Economic Partnership Agreement (CEPA) and ASEAN Trade in Goods Agreement (ATIGA) agreement.

He added that with ASEAN countries through the ASEAN Trade in Goods Agreement, more than 99 percent of products had been subject to a 0 percent tariff.

Susiwijono explained that the tariff imposed by the US 19 percent to Indonesia cannot be compared directly to the 0 percent tariff from other countries.

According to him, the tariff scheme imposed by the United States on Indonesia is actually still lower than other countries which caused a trade deficit for the US.

"Compared to all countries that have a deficit impact on America, we are the lowest. Among all ASEAN countries, for the deficit, we are the lowest. Except for Singapore, the America has a surplus to Singapore. It has a baseline of 10 percent," he explained.

He added that Indonesia's import tariffs are still very competitive, even now its position is still the lowest among countries that make America a deficit.

Susiwijono said that negotiations were still ongoing and the final list of commodities that would be fought for to get a 0 percent tariff.

"Now the commodity groups may still increase. We don't have a definite list yet, we will submit it to them," he concluded.