High taxes hamper Indonesian exports to Africa
12 December 2019
High taxes hamper Indonesian exports to Africa
We have a lot of investment there (in Africa), but it is quite hard to export due to the high import tax
Jakarta (ANTARA) - High import tax in destination countries in Africa has hampered Indonesian exports to the continent, a researcher of the Indonesian Institute of Sciences (LIPI) has said. "We have a lot of investment there (in Africa), but it is quite hard to export due to the high import tax," LIPI's coordinator of the research group for Europe and Africa Dr. Ahmad Helmy Fuady said in a seminar on Indonesian economic diplomacy in Africa held here Tuesday.
A lower import tax would significantly impact the country's exports to Africa, Fuady said, adding that import tax for Indonesian products was set at 15 percent on the average.
"Each one percent of import tax reduction will boost our export by some 0.9 percent," he said.
It means that if the government could negotiate for zero percent import tax for Indonesian products, it would bring a significant increase by 13 percent to exports amidst the current global economic slowdown.
Despite the increasing trend of global protectionism and tight competition to penetrate the African market, Indonesia could boost its export to the region by opening new embassies in the continent to improve its economic diplomacy, Fuady believed.
Indonesia's total trade to 54 African countries in 2018 has reached US$10.53 billion.
A data of the United Nation Comtrade showed that Indonesia's export to Africa has declined by 1.09 percent per year between 2015 and 2018.
Therefore, the government needs to strengthen its economic diplomacy through the establishment of new embassies or Indonesian Trade and Promotion Center (ITPC) in the region, he reiterated.
"Now we have ITPC (in Africa) only in Nigeria and South Africa," he said.
President Joko Widodo, in its second term of office, has put on priority efforts to strengthen diplomacy especially in the non-traditional market of Africa, amidst the tight competition to grab the vast market in Africa.
