Several local media have reported that the government may increase excise taxes on exports of unprocessed and semi-finished leather to restrict sales abroad. This is a serious matter given the local shortage of such raw material.
At present, the excise taxes range between 15% and 16%. The amount of the possible tax increase has yet to be disclosed.
The plan to increase the excise tax is one of the measures being studied by the Government aiming to speed up the growth of those industries. Other measures include simplification of goods classification, designation of certain ports for clothing imports and tighter supervision over illegal imports.
The leather and leather goods industry is an important sector within the Indonesian economy. According to the 2016 edition of the World Footwear Yearbook, in 2015, 1 billion pairs of shoes were manufactured in Indonesia, making this Asian country the fourth largest producer with a 4.4% world share.
Recently, Eddy Widjanarko, Chairman of the Indonesian Footwear Association (Aprisindo), confirmed that the production capacity in the country can be exploited more efficiently, growing from the current usage levels of 50-60%. If this occurs, exports of footwear from Indonesia could reach US$ billion per year in the foreseeable future, the same source defended.
Eddy Widjanarko President of Aprisindo
Information courtesy of World Footwear