Customs and Excise Revenue Declines, Prompting Evaluation of Economic Conditions

Customs and Excise Revenue Declines, Prompting Evaluation of Economic Conditions (photo:

Indonesia’s customs and excise revenue experienced a year-on-year decline of 15.65 percent until May 2023, signaling a slowdown in economic activity. The total revenue collected during this period amounted to only 39 percent of the targeted amount, equivalent to Rp118.36 trillion.

Finance Minister Sri Mulyani Indrawati shed light on the factors contributing to this negative trend, attributing it to the challenging global environment that has resulted in commodity price corrections and impacted outbound duties.

The decline in customs and excise revenue can be primarily attributed to a significant drop of 67.5 percent in outbound duties. This decline overshadowed the positive performance of inbound duties, which saw a modest growth of 7.87 percent.

The positive growth in inbound duties was mainly driven by the strengthening of the US dollar exchange rate and increased import duties on essential commodities that support the automotive industry.

Minister Sri Mulyani emphasized the resilience of the automotive sector, highlighting its continued positive activity and the demand for various mining and mineral machinery within Indonesia.

While inbound duties demonstrated a positive trajectory, excise revenue experienced a decline of 12.73 percent. This decline can be attributed to the overall sluggish production, particularly in the first category.

The revenue generated from tobacco products witnessed a notable decline of 12.45 percent, amounting to Rp89.95 trillion by the end of May 2023. Minister Sri Mulyani highlighted the impact of excise tariff increases, especially in categories I and II, which led to a significant decrease in revenue.

However, it is worth noting that category III, which had relatively lower tariffs and minimal increases, experienced a positive growth of 24.68 percent in production.

This highlights the importance of carefully managing the excise policy to ensure that production does not shift significantly to category III, as it could undermine the effectiveness of excise control measures.

In light of these developments, the government will need to assess the situation critically and explore potential measures to stimulate economic growth and enhance revenue generation.

Efforts to monitor global trends, adjust excise tariffs, and foster a conducive business environment will be crucial in ensuring sustainable revenue streams and supporting the overall economic stability of the country.