Indonesia, as the largest economy in Southeast Asia, plays a key role in regional and global trade. The country relies heavily on imports to meet its growing demand for consumer goods, raw materials, machinery, and technology. As a member of various international organizations and trade agreements, including the World Trade Organization (WTO), ASEAN Free Trade Area (AFTA), and Regional Comprehensive Economic Partnership (RCEP), Indonesia’s trade policies are shaped by both regional and global economic integration. Indonesia applies a system of customs tariffs based on the Harmonized System (HS) code classification, with varying rates depending on the type of product, the country of origin, and applicable trade agreements.
Tariff Structure in Indonesia
Indonesia uses a combination of ad valorem, specific, and combined duties based on the product category. The tariff rates applied to imports are generally structured as follows:
- 0% – 5%: Essential goods, raw materials, and capital goods.
- 5% – 15%: Intermediate goods and semi-finished products.
- 15% – 40%: Finished consumer goods and luxury items.
In addition to import duties, imported goods are subject to:
- Value-Added Tax (VAT): Currently set at 11% for most goods.
- Luxury Goods Sales Tax (LGST): Applied to specific products such as automobiles, luxury items, and high-end electronics.
- Excise Duties: Levied on certain products, including tobacco, alcoholic beverages, and sugary drinks.
Indonesia also benefits from several preferential trade agreements, which provide reduced or zero tariffs on certain products from countries with which Indonesia has signed agreements, such as ASEAN, China, Japan, and the European Union (EU).
Tariff Rates by Product Category
1. Agricultural Products and Foodstuffs
Agriculture is a vital part of Indonesia’s economy, but the country imports a significant portion of its food products, especially processed and high-end items. Tariff rates on agricultural products are designed to protect domestic producers while ensuring an affordable supply of essential foodstuffs.
1.1. Grains and Cereals
- Rice: As a staple food, rice imports are subject to a 15% tariff to protect local farmers.
- Wheat: Wheat is considered an essential raw material, and imports are generally taxed at 5%.
- Corn: Corn imports for industrial use face tariffs of 5%, while those intended for consumption may face higher tariffs of up to 10%.
Special Import Duties:
- Rice from ASEAN countries: Duty-free access is provided under the ASEAN Free Trade Area (AFTA) for rice imports originating from ASEAN member states.
- Rice from non-preferential countries: May face additional duties to safeguard domestic production.
1.2. Dairy Products
- Milk: Powdered and fresh milk imports are generally taxed at 5%.
- Cheese and butter: Imports of cheese and butter face tariffs ranging from 5% to 20%, depending on the type and origin.
- Yogurt and other dairy products: Yogurt and other dairy imports are taxed at 10% to 20%, depending on the specific product.
Special Import Duties:
- Dairy from New Zealand and Australia: Under the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), dairy imports from these countries may benefit from reduced tariffs or duty-free status.
1.3. Meat and Poultry
- Beef: Imported beef is taxed at 5% to 20%, depending on whether it is fresh, frozen, or processed.
- Poultry: Chicken and turkey imports face tariffs of 20%, though certain processed poultry products may face higher tariffs.
- Processed meats: Imports of processed meats, such as sausages and cold cuts, are taxed at 15% to 30%, depending on the level of processing.
Special Import Conditions:
- Meat imports from non-preferential countries: May face higher duties to protect local industries and comply with sanitary standards.
1.4. Fruits and Vegetables
- Fresh fruits: Imported fresh fruits such as apples, oranges, and grapes are taxed at 5% to 20%, depending on the type.
- Vegetables (fresh and frozen): Tariffs on fresh and frozen vegetables range from 5% to 20%, with some products subject to seasonal tariff variations.
- Processed fruits and vegetables: Canned or frozen fruits and vegetables face tariffs of 10% to 30%.
Special Import Duties:
- Fruits from ASEAN countries: Imports from ASEAN countries are often duty-free under AFTA, providing favorable conditions for tropical and exotic fruits.
2. Manufactured Goods
Indonesia imports a wide range of manufactured goods, including textiles, machinery, electronics, and automobiles. The tariff rates for these goods vary significantly based on the degree of processing and the intended use.
2.1. Textiles and Apparel
- Raw cotton: Imports of raw cotton, used in the textile industry, are generally taxed at 5%.
- Textiles (cotton and synthetic): Finished textiles, including garments, are taxed at 10% to 15%, depending on the fabric type and origin.
- Footwear: Imported footwear is subject to 10% to 30% tariffs, depending on the material (leather, synthetic, etc.) and product type.
Special Import Duties:
- Textiles from preferential trade partners: Imports of textiles from countries with preferential trade agreements, such as ASEAN and India, may benefit from reduced tariffs or duty-free access.
- Clothing from non-preferential countries: Higher tariffs may apply to clothing imports from non-preferential countries like China, depending on local market conditions.
2.2. Machinery and Electronics
- Industrial machinery: Machinery for agricultural, construction, and manufacturing purposes is taxed at 0% to 5%, depending on its classification as capital goods.
- Consumer electronics (TVs, radios, etc.): Consumer electronics such as televisions, radios, and mobile phones are subject to tariffs of 5% to 15%.
- Computers and peripherals: Computers and related equipment are generally subject to 0% tariffs, given their importance for technology and business development.
Special Import Conditions:
- Machinery from Japan: Under the Indonesia-Japan Economic Partnership Agreement (IJEPA), certain machinery imports from Japan benefit from reduced or zero tariffs.
2.3. Automobiles and Automotive Parts
- Passenger vehicles: Imports of passenger vehicles are subject to tariffs ranging from 40% to 50%, reflecting their classification as luxury goods.
- Trucks and commercial vehicles: Trucks and commercial vehicles face tariffs of 10% to 25%, depending on engine size and intended use.
- Automotive parts: Automotive parts and accessories are taxed at 10% to 20%, depending on the type and application.
Special Import Duties:
- Luxury cars: Higher tariffs and luxury goods sales taxes apply to luxury and high-end vehicles.
- Used vehicles: Indonesia imposes restrictions and higher tariffs on the importation of used vehicles, with the goal of encouraging the import of new and environmentally friendly models.
3. Chemical Products
Indonesia imports a wide range of chemical products for use in both the industrial and healthcare sectors. The tariff rates on chemical imports vary depending on the type of product and its intended use.
3.1. Pharmaceuticals
- Medicinal products: Essential medicines and pharmaceuticals are generally subject to 0% tariffs, reflecting their importance for public health.
- Non-essential pharmaceuticals: Non-essential pharmaceutical products, such as vitamins and supplements, are subject to tariffs ranging from 5% to 10%.
Special Import Duties:
- Pharmaceuticals from preferential trade partners: Imports of pharmaceuticals from ASEAN countries and other partners may benefit from reduced or zero tariffs under existing trade agreements.
3.2. Plastics and Polymers
- Raw plastic materials: Imports of raw plastic materials, such as polyethylene and polypropylene, are subject to tariffs of 5% to 10%.
- Finished plastic products: Imports of finished plastic goods, such as containers and consumer products, face tariffs of 10% to 20%.
Special Import Duties:
- Plastics from non-preferential countries: Additional tariffs or anti-dumping duties may apply to plastic imports from non-preferential countries like China to protect local manufacturers.
4. Wood and Paper Products
Although Indonesia has a robust forestry industry, it imports a range of wood and paper products for various uses, including packaging, printing, and construction.
4.1. Lumber and Timber
- Raw wood: Raw wood and unprocessed timber imports face 5% tariffs to encourage the use of local timber.
- Processed wood: Imports of processed wood products, such as plywood and veneer, are subject to tariffs of 10% to 15%, depending on the degree of processing.
Special Import Duties:
- Wood from ASEAN countries: Timber imports from ASEAN countries benefit from duty-free access under AFTA.
4.2. Paper and Paperboard
- Newsprint: Imports of newsprint and uncoated paper for publishing and printing are taxed at 5%.
- Coated paper: Imports of coated or glossy paper products are subject to 10% tariffs.
- Packaging materials: Paperboard and other packaging materials face tariffs of 10% to 15%, depending on the intended use.
5. Metals and Metal Products
Indonesia is a major producer of minerals and metals, but it also imports significant amounts of processed metal products to support its construction and manufacturing industries.
5.1. Iron and Steel
- Raw steel: Imports of raw steel and other ferrous metals are subject to 5% tariffs as raw materials for construction and manufacturing.
- Finished steel products: Imports of finished steel products, such as bars, beams, and sheets, face tariffs ranging from 10% to 15%, depending on their application.
5.2. Aluminum
- Raw aluminum: Imports of raw aluminum are generally subject to 5% tariffs.
- Aluminum products: Finished aluminum products, such as cans and sheets, are taxed at 10% to 15%, depending on the type.
Special Import Duties:
- Metals from non-preferential countries: Steel and aluminum imports from non-preferential countries may face additional duties or anti-dumping tariffs to protect local industries.
6. Energy Products
Energy is critical to Indonesia’s growing economy, which relies on both imported fossil fuels and renewable energy technologies to meet demand.
6.1. Fossil Fuels
- Crude oil: Imports of crude oil are subject to 0% tariffs, given the country’s reliance on oil for energy production.
- Refined petroleum products: Gasoline, diesel, and other refined petroleum products are taxed at 5% to 10%, with additional excise duties applied.
- Coal: Imports of coal are subject to 5% tariffs, depending on the intended use.
6.2. Renewable Energy Equipment
- Solar panels: Imports of renewable energy equipment, such as solar panels, are subject to 0% tariffs, to promote the adoption of clean energy technologies.
- Wind turbines: Wind energy equipment is often exempt from tariffs or subject to minimal tariffs to encourage investment in renewable energy projects.
Special Import Duties by Country
1. ASEAN Member States
As a member of the ASEAN Free Trade Area (AFTA), Indonesia enjoys duty-free trade with other ASEAN countries. Most goods traded within the region are exempt from import tariffs, provided they meet the rules of origin criteria.
2. China
Indonesia and China are both members of the Regional Comprehensive Economic Partnership (RCEP), which provides reduced tariffs on a wide range of goods. Chinese imports of consumer electronics, machinery, and textiles benefit from reduced tariffs under this agreement.
3. Japan
Under the Indonesia-Japan Economic Partnership Agreement (IJEPA), certain goods imported from Japan, such as machinery, automobiles, and industrial equipment, benefit from reduced tariffs or duty-free status.
4. United States
Indonesia’s imports from the United States are subject to standard tariff rates, although certain sectors such as energy and technology may benefit from preferential treatment under trade agreements.
5. European Union (EU)
Indonesia is currently negotiating a free trade agreement with the European Union, which, once finalized, will reduce tariffs on a wide range of products. Until then, goods imported from the EU are subject to standard tariff rates, though certain products benefit from preferential tariff rates under the Generalized System of Preferences (GSP).
Country Facts: Indonesia
- Formal Name: Republic of Indonesia (Republik Indonesia)
- Capital City: Jakarta
- Largest Cities:
- Jakarta
- Surabaya
- Bandung
- Per Capita Income: $4,200 (2023 estimate)
- Population: 278 million (2023 estimate)
- Official Language: Indonesian (Bahasa Indonesia)
- Currency: Indonesian rupiah (IDR)
- Location: Southeast Asia, an archipelago between the Indian Ocean and the Pacific Ocean, bordered by Malaysia, Papua New Guinea, and East Timor.
Description of Indonesia’s Geography, Economy, and Major Industries
Geography
Indonesia is the world’s largest archipelago, consisting of over 17,000 islands, with the five main islands being Java, Sumatra, Kalimantan, Sulawesi, and Papua. The country is located in Southeast Asia, straddling the equator and extending between the Indian and Pacific Oceans. Indonesia’s location gives it a tropical climate with high rainfall, and its volcanic geography makes it highly fertile and prone to natural disasters such as earthquakes and tsunamis.
Economy
Indonesia is the largest economy in Southeast Asia and the 16th largest in the world by nominal GDP. The economy is classified as a developing market economy, with key sectors including manufacturing, mining, agriculture, services, and tourism. Indonesia is a major exporter of natural resources, such as oil, gas, coal, and palm oil. The government has prioritized economic diversification, with significant investments in infrastructure, technology, and renewable energy.
Despite significant growth, Indonesia still faces challenges, including inequality, infrastructure gaps, and a large informal economy. The government is focusing on reforms to improve the investment climate, promote exports, and enhance global competitiveness.
Major Industries
- Agriculture: Agriculture remains an essential sector, employing a large portion of the population. Indonesia is a leading global producer of palm oil, rubber, coffee, and cocoa.
- Mining and Energy: Indonesia is rich in natural resources, including coal, oil, natural gas, and gold. The mining sector is a significant contributor to exports.
- Manufacturing: The country has developed a robust manufacturing sector, producing textiles, electronics, automobiles, and pharmaceuticals.
- Tourism: Tourism is a growing industry, with visitors drawn to Indonesia’s tropical islands, cultural heritage, and biodiversity, particularly in Bali, Jakarta, and Yogyakarta.
- Technology and Services: The tech sector has expanded rapidly in recent years, particularly in e-commerce and fintech, supported by Indonesia’s large and youthful population.
