Agrees On 11 Percent VAT Increase, Employers' Association: But The Moment Is Not Right, Because It Coincides With Ramadan

JAKARTA - Chairman of the Indonesian Employers' Association (Apindo) Hariyadi Sukamdani said the 11 percent increase in value added tax (VAT) per April 2022 did not have a big impact on inflation. However, inflation in April 2022 has the potential to increase because it coincides with Ramadan and Eid.

Therefore, according to Hariyadi, under these conditions, an increase in VAT of 11 percent from 10 percent is not the right step. Even so, Apindo initially approved the VAT increase.

Furthermore, Hariyadi said that the effect was not significant on people's purchasing power even for basic needs. However, it will affect the consumer goods of the middle class.

"We agree that this increase will be 11 percent in 2022, but the momentum is not right. This will have a slight effect, even though basic materials are not imposed, but surely this will have an effect," he said in a virtual discussion, Thursday, April 7.

According to Hariyadi, if the government and Bank Indonesia (BI) are able and successful in reducing the risk of rising inflation and stabilizing the increase in food prices, the increase in VAT rates will not have a significant impact on rising inflation in April and the following months.

"Indeed, in conditions like this, the government must look again at whether this is still being enforced under these conditions or for a while," he explained.

To ensure price affordability, Apindo also requests that the provision of social assistance stimulus with market operations, the highest retail price policy (HET) and reference prices for food ingredients is carried out evenly, continuously and on target.

"We know that our state budget is not in a good condition, the pressure is also quite large and it also results in foreign loans. But this will be a problem when these prices cannot be controlled. ," he said.

According to Hariyadi, what is currently happening in Indonesia cannot be avoided considering that Indonesia is still dependent on imports for some commodities and the effects of the Russo-Ukrainian war.

Furthermore, Hariyadi said the influence of politics will have a lot of impact on food energy issues, especially fertilizers and other sectors.

"Whatever happens is something we cannot avoid and there is no way we can avoid the price increases that occur," he said.