- Indonesia has imposed curbs on cheap imports to rein in e-commerce platforms
- There is growing resentment across Southeast Asia against Chinese e-commerce firms
- Import tariffs can create tensions and hurt some local businesses
- Other countries in Southeast Asia are also cracking down with higher import duties and outright bans on some China imports
The Indonesian government says it wants to protect its local business from cheap Chinese online imports, with a plan to impose import duties of up to 200% on a broad range of goods including textiles, clothing, footwear, cosmetics, and electronics. The measures are largely aimed at Chinese imports, which have surged in recent years as e-commerce platforms gained in popularity.
“If we are flooded with imported goods, our micro, small and medium enterprises could collapse,” Zulkifli Hasan, Indonesia’s trade minister, said in a briefing in July. These businesses make up about 60% of the country’s gross domestic product, and employ around 120 million people, according to government data.
Indonesia is Southeast Asia’s largest e-commerce market, accounting for nearly half the gross merchandise value of the eight top platforms, according to advisory firm Momentum Works. The value of e-commerce sales in Indonesia hit $77 billion last year, authorities say.
Chinese imports had enjoyed low, or zero, duties in Indonesia under regional trade agreements. But as sales of cheap clothes, shoes, and electronics surged online, the government stepped in to protect local businesses. President Joko Widodo has repeatedly raised concerns about low-priced Chinese-made goods, and urged consumers to shun imported products. The country has imposed the strictest curbs on cross-border e-commerce sales in the region. It set a de minimis limit — the threshold below which goods are not subject to import duties — at $100, then lowered that to $75, and then to $3. Authorities also banned shopping on social media platforms last year, forcing TikTok Shop to close. But the platform was back online after about two months, saying it had met the requirements.
Across Southeast Asia, other governments are also cracking down with higher import duties and outright bans on some goods. Malaysia has a 10% sales tax on imported goods priced below 500 ringgit ($106), while the Philippines has imposed a 1% withholding tax on online merchants. In Thailand, the entry of Chinese e-commerce firm Temu has sparked calls for higher tariffs on some imported goods. More taxes and curbs on e-commerce firms may be imminent across the region, Simon Torring, co-founder of research firm Cube Asia, says.