In a move to safeguard its local businesses, Indonesia is planning to impose import duties of up to 200% on a wide range of products, including textiles, clothing, footwear, cosmetics, and electronics. This policy is aimed primarily at countering the influx of low-cost Chinese imports sold through popular e-commerce platforms such as Shopee, Lazada, and TikTok Shop.
The initiative comes in response to growing concerns from local entrepreneurs who are struggling to compete with the flood of inexpensive imports. Devita Ariyanti, who has operated a small hijab store in Yogyakarta for four years, exemplifies the challenge many face. Ariyanti sources her hijabs from local markets, with prices ranging from 150,000 rupiah ($9) to 400,000 rupiah ($25). She finds it increasingly difficult to compete against the significantly cheaper hijabs available online. “Luckily, I have loyal customers,” the 43-year-old entrepreneur told Rest of World. “But competing with cheap imports is tough. A higher import tax would help us.”
The Indonesian government, led by Trade Minister Zulkifli Hasan, argues that protecting local micro, small, and medium enterprises (MSMEs) is crucial. These businesses contribute around 60% of the nation’s gross domestic product and employ about 120 million people. Hasan highlighted the risk of MSMEs collapsing if inundated with foreign goods, noting, “If we are flooded with imported goods, our micro, small, and medium enterprises could collapse.”
Indonesia, which is Southeast Asia’s largest e-commerce market, saw its e-commerce sales hit $77 billion last year. The rapid growth of online platforms has been accompanied by a surge in cheap imports, primarily from China, which previously enjoyed low or zero import duties under regional trade agreements.
In response to the challenges posed by e-commerce, Indonesia has implemented a series of measures including a stringent de minimis limit—reducing the threshold for duty-free goods from $100 to just $3. Additionally, the country has enforced a ban on shopping via social media platforms, although TikTok Shop has resumed operations after complying with local regulations.
Regional neighbors are also reacting to the impact of e-commerce on local markets. Malaysia and the Philippines have introduced higher taxes on imported goods, while Thailand is considering increased tariffs amid concerns over the expansion of Chinese e-commerce firms like Temu.
Experts like Simon Torring from Cube Asia note that Indonesia’s actions are setting a precedent for the region. However, Bhima Yudhistira, director of the Center of Economic and Law Studies, cautions that while higher import duties could benefit local industries, they might also provoke international tensions and potential retaliatory measures.
