President to Abolish Import Quotas Amid Reciprocal Tariff Issue

KatadataOTO – Reciprocal tariffs or import tariffs set by the President of the United States are said to have a significant impact on various industries in Indonesia, including automotive.

In short, various countries that previously exported to the US have the opportunity to seek other alternative countries with lower tariffs and supportive policies.

Indonesia has become one of the target countries for automotive products from China. This is because the government provides relief for locally assembled cars, such as incentives in the form of a 10 percent VAT (Value Added Tax) reduction.

Then, for manufacturers who have not yet assembled locally but are committed to investing, they receive a limited number of import quotas with several conditions.

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However, not long ago, Indonesian President Prabowo Subianto expressed his desire to eliminate import quotas in various industrial sectors, especially for goods that concern people's lives.

“The Coordinating Minister yesterday, the Minister of Finance, the Governor of BI (Bank Indonesia) were there, the Chairman of DEN (National Economic Council). I have already given the order to eliminate import quotas,” said Prabowo as quoted from the official website of the President of the Republic of Indonesia, Thursday (10/04).

The import quota mechanism, which can hinder the smooth flow of trade, needs to be eliminated, according to the president.

This is claimed to be a strategic effort by the government to streamline bureaucracy, provide convenience for business actors, and encourage national economic growth.

“Anyone can import. Whatever you want to import, just go ahead. Our people are smart too,” said Prabowo.

From the perspective of the automotive industry, the elimination of import quotas certainly makes it easier for a handful of brands.

Previously, an import quota for electric cars was in effect, as enjoyed by BYD. The condition was that the factory must produce the same number of units as were imported by 2027.

If the production units fall short, there is a penalty equivalent to the incentives that have been disbursed to BYD.

Import quotas are one way to attract manufacturers to commit to investment and not to import continuously.

The discourse on eliminating import quotas, coupled with the application of reciprocal tariffs from the US to various countries, has the potential to cause Indonesia to be increasingly flooded with foreign products in the future.

Photo : KatadataOTO

Previously, the president also planned to relax regulations related to TKDN (Local Content Requirement), as it was considered to be deterring investors from looking at Indonesia.

Meanwhile, Aismoli (Indonesian Electric Motorcycle Association) actually wants the government to tighten TKDN regulations.

“This is to protect local producers from the potential onslaught of imported goods entering Indonesia,” said Budi Setiyadi, Chairman of Aismoli, in an official statement some time ago.