The regulation regarding the increase in VAT from 11% to 12% has indeed been regulated in Law No. 7 of 2021 concerning the Harmonization of Tax Regulations. However, currently, according to the General Chairperson of Hippindo (Association of Indonesian Retailers and Shopping Center Tenants), Budihardjo Iduansjah, the situation has not recovered after the COVID-19 pandemic. Therefore, he asked the government to postpone the realization of the VAT increase.
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Currently, said Budihardjo, entrepreneurs in the retail sector are recovering after going through the pandemic. Therefore, they should not be burdened with this regulation. "As entrepreneurs, we support the government's program, especially those that have been strengthened in the law. However, if I may suggest, the implementation of this VAT increase should be postponed for one or two years, while we prepare ourselves for this increase," he requested.
However, if the government still does not budge on the plan to realize this VAT increase, as a retail entrepreneur, Budi asked for leniency. "We are asking for leniency from the government. If the delay is not possible, the alternative is to pay taxes in installments. Another effect of this VAT increase is that the selling price will increase because there is a VAT burden. The impact is that consumers will reduce purchases," he continued.
In a situation like this, he suggested that the government encourage sales and increase people's purchasing power. "Our annual turnover is almost IDR 700 trillion. If there is a 1% VAT increase, that's quite a lot. Therefore, we expect the government to help the welfare of employees in the retail sector. The problem is, if prices increase, sales will be corrected. Or it could also be by helping entrepreneurs in promoting their businesses, the goal is to boost people's purchasing power," explained Budi.
Indonesia, he said, is still lagging behind in terms of shopping tourism. Indonesians themselves go to Singapore, Malaysia, or Thailand as shopping tourism destinations. The reason is, prices in the three ASEAN member countries are more competitive. According to Budi, in Indonesia prices are 30% to 40% more expensive. So, it is not surprising that shopping centers in Singapore, Kuala Lumpur, and Bangkok are being invaded by Indonesians. "This must be a concern. The government must make shopping tourism a means of boosting the economy. Bangkok lives from tourists, one of which is shopping tourism that makes hotels full, taxis are in demand, and the retail sector there is vibrant," said Budihardjo Iduansjah to Edy Suherli, Bambang Eros, Irfan Meidiannto, and Dandi Januar from VOI who met him at Sarinah Thamrin, Jakarta, recently.
The government will implement a VAT increase from 11% to 12% and will be implemented in early 2025, as stipulated in Law No. 7 of 2021 concerning Harmonization of Tax Regulations. As a business actor, what is your reaction?
As entrepreneurs, we support the government's program, especially those that have been strengthened in the law. However, if I may suggest, the implementation should be postponed for one or two years, while we prepare ourselves for this increase. After COVID-19 hit, we had to fix domestic affairs first. Give us time to recover first.
However, if it really can't be postponed, we hope there will be efforts to balance it by stimulating the public to increase purchasing/spending power. This is important because more than 50% of what has supported us so far is the local market. The increase in VAT can be used as ammunition to maintain our domestic market. In addition, there is also a return that is given back to entrepreneurs. The form can be in the form of tax relief or incentives that aim to ease the burden on entrepreneurs.
The 1% increase in VAT will have an impact on entrepreneurs, what are they?
The impact is that business expenses will increase with the increase in VAT. It must be paid every month, so that the cash flow of entrepreneurs will be affected. Meanwhile, our cash flow is currently focused on expansion, such as buying goods, opening stores, or recruiting new employees. Meanwhile, this increase in VAT must be paid in advance. Therefore, we are asking for relief from the government. If a delay is not possible, the alternative is to pay in installments. Another effect of this VAT increase is that the selling price will increase because there is a VAT burden. The impact is that consumers will reduce purchases or postpone their purchases.
When VAT increases, the form of assistance that entrepreneurs expect is a delay in the implementation of 12% VAT and postponed payments, what are the other alternatives?
It could also be assistance to ease the burden on employees in the retail sector. Our annual turnover is almost IDR 700 trillion. If there is a 1% VAT increase, that is quite large. Therefore, we expect the government to also pay attention in the form of helping the welfare of employees in the retail sector. The problem is, if prices increase, sales will be corrected. Or it could also be by helping entrepreneurs in promoting their businesses, the aim is to boost people's purchasing power.
There are also our advertisements installed inside the store that can be given a discount. In addition, for promotional videotrons, electricity can be subsidized so that our city becomes more alive. Many local and foreign tourists come, hang out, and shop.
At a time like now, said Hippindo General Chairman Budihardjo Iduansjah, what the government needs to help is how entrepreneurs can increase their turnover, which ultimately can pay taxes smoothly. (Photo: Bambang Eros, DI: Raga Granada VOI)
So there are things that are improved and on the other hand there are things that are relaxed?
It must be balanced, in my opinion because VAT has increased to 12%, the results are returned to entrepreneurs. From a turnover of IDR 700 trillion then increasing to IDR 1,000 trillion, it means that VAT revenue is getting bigger. So what needs to be increased is the turnover, not the levy.
What other programs will Hippindo carry out in an effort to attract buyers and increase turnover?
We initiated the “Shop in Indonesia” program. We just launched this at the Indonesia Retail Summit. Thank you to the Coordinating Minister for the Economy who opened this event. This is an effort to attract foreign tourists and reduce our tourists from shopping abroad. If VAT increases, for foreign tourists there is a 12% refund program. This is quite large and hopefully it can attract their interest in coming. This refund must be made easier and there must be additional services, such as being given a cup of coffee. So, how do you make tourists happy to come to Indonesia? There must be cooperation between the Ministry of Finance and the Ministry of Tourism.
It must be admitted that our tourism sector is still lagging behind Singapore and Thailand. This must be fixed. Bangkok is alive from foreign tourists who come. Hotels are full, taxis are in high demand, and the retail sector is also vibrant. Everyone enjoys it when the ecosystem is alive. Everything must be fixed so that tourists will come.
In shopping tourism, how is Indonesia's competitiveness compared to Singapore, Malaysia, and Thailand?
We are still lagging behind those countries. Global brands are currently cheaper in Malaysia. We are 30% to 40% more expensive. So don't blame our people if they shop abroad. So global brands that have paid import taxes must be given convenience. They do not compete with MSMEs because their class and market segments are different. It's the same with foreign singers like Taylor Swift, if they have a concert here, they will not compete with local singers. The impact is that our people do not need to go abroad to watch Taylor Swift's concert.
What we need to protect are MSME goods from China, we need to protect them so that they do not compete with local MSMEs. Especially if the entry is illegal, this must be eradicated. Because it can kill local MSMEs.
So our tourism is not only about natural beauty and historical heritage?
Borobudur and Bali which are already famous do not need to be questioned. We are looking for new gaps and opportunities in shopping tourism, how this sector can also attract people to come. After Borobudur, tourists can shop before going home. So, it is mutually beneficial. We have not yet become a shopping destination, our people still go to Singapore, Kuala Lumpur, and Bangkok if they want to shop. With the "Shop in Indonesia" program, hopefully it can boost tourists, especially since VAT is going to increase.
For the IKN Nusantara which is currently still being built, what is Hippindo doing?
If I'm not mistaken, there will be a mall built in the IKN Nusantara. If it is finished, we will enter. The closest is the Hippindo member from Balikpapan who will be more involved. Yesterday, during the commemoration of the Republic of Indonesia's Independence Day, we did not send a food truck because it was sudden and there was also a reduction in invitations.
Many shopping centers are deserted, the shops are closed, did the government not conduct a survey before granting permission to establish new shopping centers?
I see it from an optimistic perspective. In my opinion, Jakarta still lacks malls. Why are malls and shopping centers in Jakarta deserted? Because there is an odd-even policy. If it were abolished, I am sure that visitors to the mall would increase. Now the odd-even policy applies from 16.00 to 21.00 WIB, try changing it to 16.00 to 19.00 WIB, I am sure the malls would be crowded again because many people could come. So if Jakarta regulates policies that are friendly to the business world in malls, the malls will not have enough parking. That is why malls in Jakarta are crowded on Saturdays and Sundays, because they are free of odd-even.
Just look at malls on the outskirts of Jakarta such as Serpong, Bekasi, Tangerang on weekdays, they are crowded there because there is no odd-even policy. We open many shops in those areas. So, if the government's policy is right, there is still a shortage of malls in Jakarta. Not to mention when tourists come in.
The government will impose excise on sweetened beverages, will Hippindo members be affected?
The intention is good so that the public can avoid diabetes. But in my opinion, awareness is more important. This will reduce turnover for entrepreneurs and retailers. Regulations on cigarette sales are also very strict through PP No. 28 of 2024 concerning Implementing Regulations of the Health Law. Regulations on halal are also too detailed, even trucks that transport food must also have halal certificates. In my opinion, we have too many unnecessary regulations. How can we move towards a Golden Indonesia if this is the case. The excise on sweetened beverages will increase prices. Consumers will bear it. In the end, sales will decrease, turnover will also decrease. Later, tax payments will also be affected.
So what is the solution in your opinion as an entrepreneur?
Indonesia is a developing country. The rules of developed countries cannot yet be applied in Indonesia. Let's just use the rules that are often used by developing countries. Later, when we have moved up a class, we will use the new rules. So, the government must know the priorities, which are important and which are not important.
What are your hopes for the new president?
My advice to the new government, continue to strengthen the domestic sector. Strengthen domestic trade. The consumption sector must be maintained. This is what saved us during the COVID-19 pandemic yesterday. When the global situation was chaotic, Indonesia was still calm.
What are the details of strengthening the domestic sector?
Clothing, food must be sufficient, prices are stable, transactions and logistics circulation between islands are smooth. Make our large population the main market, thank God if we can expand to other countries such as Southeast Asia. Our market is 300 million plus ASEAN countries 300 million, so that's already 600 million, this is a very large market. No need to be ambitious, optimize our food products for this large market.
Budihardjo Iduansjah, While Diving Drink Water
As the General Chairman of Hippindo (Association of Indonesian Retailers and Shopping Center Tenants), Budihardjo Iduansjah often visits various regions throughout Indonesia and even abroad. That's when he also travels and tastes the culinary delights in the regions he visits. As the old saying goes: while diving, drink water.
Limited time and being busy as an entrepreneur and organizational leader make Budi astute at taking advantage of the situation. When he is assigned to a region as an administrator and leader of an organization, he uses it for other activities after his main task is completed.
"Taking care of an organization and also a business at the same time makes that time very valuable. Traveling and traveling are difficult things to do. Finally, I use the time I have when carrying out organizational duties in various regions," he explained.
Before leaving for the location of the assignment, he has researched the area to be visited or asked the local Hippindo to provide information about tourist locations and culinary tours that are superior. “That information is important so that I can calculate the time of my visit and how many locations I will visit after my main task is finished,” said the man who likes running and swimming.
When visiting neighboring countries such as Singapore, Malaysia, Thailand, Budi does the same thing, namely traveling and tasting the typical culinary delights in the cities he visits. Not infrequently he also meets Indonesians who are traveling to the same country. He is curious and does a little research directly.
“I often meet Indonesians when traveling to Singapore, Malaysia, and Thailand. I am curious why the places I visit are visited by many Indonesians. Some are shopping, seeking medical treatment, and traveling,” he said.
As a businessman, he is open-minded. “If I were the government, I would simplify regulations for the business world so that they can open branches in Indonesia. For example, busy hospitals, offer entrepreneurs or investors to open branches in Indonesia. This is expected to reduce the number of our people who go abroad. So, waste your money in Indonesia, don't go abroad,” he explained.
Watch, Learn, and Apply
One thing that never escapes his attention is the retail sector. “I almost always look at the malls in the countries I visit and what their retail sectors are like. Then I look, study, and try to implement them in Indonesia,” said Budihardjo Iduansjah.
One of the programs currently being carried out by Hippindo, "Belanja di Indonesia Aja," is one of the results that he compared from other countries and then adjusted to the situation and conditions in Indonesia. “Hopefully this program can be successful and be of interest to the community and local and foreign tourists,” he hoped.
One of Budi's hobbies is participating in exhibitions, both domestically and internationally. Because he often participates in exhibitions, he wants many exhibitions to be held in big cities in Indonesia.
“If we hold an exhibition, it can attract domestic and foreign tourists. The exhibition participants, who are generally business people or government institutions. They can make business deals after the exhibition, either B2B (business to business) or B2G (business to government). If possible, Indonesia should hold an event like the G20 every year. So, there are always events that make people come to Indonesia," he continued.
Music Concert
Another thing that Budihardjo is concerned about is music concerts and art performances. “If possible, when people think of world-class music concerts, they will think of Indonesia. Don’t lose to other countries like Singapore,” he said.
The economic impact of a music concert is huge. “That’s why Singapore is so enthusiastic about holding music concerts, yesterday Taylor Swift and Coldplay were held for several days. So, Indonesians and people from other ASEAN countries flew to Singapore. I also went there but via Batam,” he said.
At that time, said Budi, hotels and taxis were in high demand. “Those who came definitely stayed overnight, then taxi drivers in Singapore had a harvest, they went back and forth taking Indonesians who wanted to watch the concert. The economic impact is extraordinary. That’s why world-class music concerts must be held in Indonesia. Jakarta has the opportunity for that,” he said.
The government and the business world, in this case music promoters, can collaborate. The government can make licensing easier, banks can provide capital for their businesses, and so on. So, the economic impact is everywhere. “How many parties will get a share of the fortune if there is a music concert. "This will make the economy move, the retail sector will also get a share. One concert alone can support many people," said Budihardjo Iduansjah.
"My advice to the new government, continue to strengthen the domestic sector. Strengthen domestic trade. The consumption sector must be maintained. This is what saved us during the COVID-19 pandemic. When the global economy was in chaos, Indonesia was still calm,"
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
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