Heaptalk, Jakarta — The Indonesian Employers’ Association (Apindo) stated on Tuesday (11/19) that rampant illegal import activities deter domestic and foreign investors from establishing operations in Indonesia.
The Foreign Trade Committee and Export Development Chair in Apindo’s Trade Division, Budihardjo Iduansjah, emphasized, “Our main challenge is eliminating prohibited imports. Whether local or international, investors will hesitate to invest here if they see unchecked illegal importation routes. It undermines the confidence needed to build factories and invest in Indonesia,”
According to Budihardjo, Indonesia recorded official textile and textile product (TPT) imports from China amounting to US$3.5 billion, regulated by Import Approvals. However, certain unscrupulous importers have exploited the system by trading import quotas for profit.
The $2.9 billion worth of unregistered or illegal TPT imports is even more concerning. These activities are typically facilitated through unethical practices such as under-invoicing, declaring transaction values below the actual amount—or transshipment, where goods are shifted between modes of transport during the import process to evade detection.
Economic Impact and Revenue Loss
The illegal importation of $2.9 billion in goods is estimated to result in a revenue loss of approximately Rp25.6 trillion for the Indonesian government. This staggering figure includes potential losses from:
- Value-added tax (VAT) at 11%
- Income tax at 25%
- Import duties at 20%
- Safeguard duties at 25%
He warned that such significant losses in state revenue could have broader implications for Indonesia’s economic stability. Thus, he urged stricter enforcement of trade regulations to combat illegal imports.
“Law enforcement must be upheld. The domestic trade sector contributes 52% to our economy. If it suffers, the repercussions for the national economy could be severe,” he concluded.
Illegal imports threaten Indonesia’s economic foundation and jeopardize its attractiveness as an investment destination. Resolving this challenge is critical to fostering a conducive business environment and securing long-term economic growth.
