APPBI Asks For 12 Percent VAT Implementation To Be Postponed, Here Are Three Reasons

Chairman of APPBI Alphonzus Widjaja (Theresia Agatha/VOI).

JAKARTA - The Indonesian Shopping Center Management Association (APPBI) revealed that there are three reasons it is necessary to postpone the implementation of Value Added Tax (VAT) by 12 percent which is planned to take effect on January 1, 2025.

First, the implementation of the increase in VAT will increase the price of goods and products. Thus, it will again reduce the purchasing power of the middle class.

"Yes, of course this will make it more difficult for the lower middle class," said the Chairperson of APPBI, Alphonzus Widjaja, when met by VOI after the 2024 KlingKing Fun press conference at the Kota Kasablanka Mall, Tebet, South Jakarta, Wednesday, November 27, 2024.

Second, Alphonzus assessed that there was no reason to urge the Indonesian government to implement VAT of 12 percent next year.

"Actually, the VAT rate in Indonesia is not very low compared to neighboring countries."

"So, I don't think there is an urgent reason to increase the VAT rate," he said.

Third, according to Alphonzus, currently economic growth or transactions, especially in the retail sector, have not fully recovered.

Therefore, he said, when 12 percent VAT is really implemented, it will hinder transaction growth.

"The third reason is that I think economic growth or transactions, especially in retail, are not optimal. So, it should be maximized first before the tariff is increased."

"Don't do it the other way around. On the other hand, it will actually hinder trade growth," he said.

According to Alphonzus, the government should postpone the implementation of the 12 percent VAT. You see, he considered that the timing was not right.

"So, I think that's three reasons why we APPBI also asked the government to postpone it. Indeed, the timing is not right, yes, it doesn't match."

"It is true that the government needs additional state revenue, but I don't think it is the time now. It should be postponed," he said.

Furthermore, said Alphonzus, if the implementation of VAT 12 percent is properly implemented, it will be feared that growth in the retail sector will not be able to reach double digits.

"I think (the retail sector) will continue to grow, but it will not be significant. Especially now that the UMP wants to go up. (The growth) must be below 10 percent," he concluded.