Minister of Finance Suspends Import Duties on Food-Related Items

Minister of Finance Regulation No. 13/PMK.011/2011 on the Fifth Amendment to Minister of Finance Regulation No. 110/PMK.010/2006 on the Classification System for Goods and the Determination the Rate of Duty on Imported Goods (“Regulation”) was issued to set the duty rates on imported goods, as an implementation of Article 12 (3) of Law No. 10 of 1995, as amended by Law No. 17 of 2006, on Customs.

Following the release of the Consumer Price Index for December, the year-on-year inflation for 2010 was at 6.96%, above the government target of 5% plus or minus 1%. The Ministry of Finance believes that the higher-than-expected inflation rate was fueled mainly by the high inflation of volatile foods, which reached 17.74% year-on-year due to weather anomaly-induced production and distribution disturbances.

According to the preamble, the Regulations is intended to help mitigate the impact of increased food prices by adjusting the imposition of tariffs on goods imported in the form of food and food products, feedstuff, and certain fertilizers.

Pursuant to Article 1, Appendices I and II set out the new import duty rates. Pursuant to Article 2 (1), Appendix I enumerates 57 item types that will be exempt from import duties until 31 December 2011 (and re-evaluated two months prior to that date according to Article 2 (3)); and, according to Article 2 (2), Appendix II subjects these same 57 item types to a 5% import duty as of 1 January 2012.

Item types enumerated in the Appendices include:

Previously issued Minister of Finance Regulation No. 241/PMK.011/2010 set the import duty on rice to IDR 0 per kilogram from 22 December 2010 until 31 March 2011, and IDR 450 per kilogram starting from 1 April 2011.

The Regulation has been in force since 24 January 2011.