Ready-to-eat Food Will Be Excise, Don't Have An Impact On MSMEs

Photo by Artem Beliaikin on Unsplash

JAKARTA - The Indonesian House of Representatives has highlighted the Government's policy regarding processed foods such as ready-to-eat food which will be subject to excise duty with the aim of controlling the consumption of sugar, salt and fat to reduce the number of non-communicable diseases. Commission XI of the Indonesian House of Representatives asked the Government to ensure that this policy does not harm small business actors such as SMEs and MSMEs.

"We want the Government to ensure that the policies issued do not harm the community. Although the goals are good, the profits must be considered," said Member of Commission IX of the Indonesian House of Representatives Charles Meikyansah, Thursday, August 1.

The fast food policy subject to excise duty is contained in Government Regulation (PP) Number 28 of 2024 concerning Implementing Regulations of Law Number 17 of 2023 concerning Health which was signed on July 26, 2024 by Indonesian President Joko Widodo.

This policy was issued as an effort to tighten the circulation of fast food processed foods considering the number of cases of non-communicable diseases such as diabetes to obesity continues to creep up.

The rules contained in Article 194 of PP 28/2024 state that processed food is processed food or drinks resulting from a process in a certain way or method, with or without additional ingredients. Meanwhile, what is meant by ready-to-eat processed food is processed food and/or drinks that have been processed and are ready to be served immediately.

If this proposal is approved, it will apply to all places of business or outside business such as food served in Boga services, hotels, restaurants, restaurants, canteens, canteens, street vendors, mobile food outlets, and mobile food or similar businesses.

Charles also questioned how the implementation of this imposition of excise on small business actors, especially street vendors (PKL) who serve fast food or fast food.

"What needs to be questioned is how to implement it? How to charge this excise tax to small business actors?" he said.

Charles reminded that the policy of imposing excise on fast food should not disturb the public, let alone harm them.

"Fortunately, MSME traders who sell ready-to-eat food are not necessarily big, let alone mobile traders. It's sometimes not enough for capital costs. Will this policy be effective?" said Charles.

"Perhaps large fast food restaurants will be effective, but not necessarily for micro industries. It must be reviewed again, do not let the good intentions of this regulation make it difficult for the community," continued the legislator from the East Java IV electoral district.

Charles also reminded the possibility of an increase in food prices due to excise loading. This makes those affected not only traders but also the public as consumers.

"This application of excise can increase the operational cost burden for MSMEs. They will have difficulties and be in a dilemma position whether to increase the selling price of products or their slightly reduced profits," Charles explained.

The Commission in the DPR in charge of state financial affairs also asked the Government to conduct an assessment of the regulation. Charles said that his party would ask the Government for an explanation regarding this matter, especially the Ministry of Finance (Kemenkeu) as a partner of Commission XI of the DPR.

"Basically we support policies that improve the quality of people's lives," he said.

"But it must be clear what the mechanism is and how big the benefits are. Is it comparable to the impact that in this case concerns small business actors," added Charles.

Charles also reminded the Government to present a football policy with a solution to the impact that arises from the regulation.

"In this case, it can be done by providing support and incentive programs for small and medium enterprises to help them adapt to this new policy, including training and coaching," he said.

On the other hand, Commission XI hopes that there will be optimal socialization before the policy is implemented. The public needs to understand how the policy of imposing excise on fast food will provide them with benefits again.

"The government must explain transparently the purpose and benefits of this imposition of excise. Of course there must be discussions with the DPR," Charles explained.

"Is there a guarantee that this excise income will later be used effectively to improve people's welfare, including for the development of public infrastructure, health services, and education?" he concluded.