Industry Minister Agus Gumiwang Kartasasmita. - Photo: The Jakarta Post/ANN
JAKARTA: The Industry Ministry has floated the idea of giving incentives to sweetened beverage producers to counter an excise on their products that may kick in at the turn of the year.
Industry Minister Agus Gumiwang Kartasasmita said the proposed measure could prevent an increase in the prices of sweetened beverages.
“I believe there will be consequences, because, according to some explanations, people’s purchasing power is weakening. I think that is happening because of [rising] prices,” Agus said on Thursday (Sept 12), as quoted by CNN Indonesia.
Agus argued that giving the producers incentives could help them keep the prices of their products at the current levels.
However, he refrained from divulging further details on the proposed incentives and said his office was still assessing the plan.
Agus’ statements come after the House of Representatives’ State Finance Accountability Agency (BAKN) suggested on Tuesday that a 2.5 percent excise be implemented starting at the beginning of 2025 and then gradually be raised to 20 percent.
Customs and Excise Director General Askolani said on Tuesday that the government welcomed BAKN’s suggestion but noted that the decision on whether to implement such a tax would be left to the incoming government, according to Kontan.
The Finance Ministry has been entertaining the idea of a sugary drinks excise since 2009, but progress has been sluggish, mainly because of opposition from businesses, which argue it might exacerbate inflation.
No concrete steps were taken until 2022, when the government included a revenue collection target for the excise in the 2023 budget, alongside a separate levy on plastic.
The targeted amounts were Rp 980 billion (US$63.24 million) for plastic and Rp 3.08 trillion for sweetened beverages.
However, the measures remain unenforced, as the government had yet to issue any implementing regulation specifying which products would be subject to the levies.
Revenue targets for the levies were stipulated again in the 2024 budget plan, which President Joko “Jokowi” Widodo signed off on through Presidential Regulation No. 76/2023 on Nov. 28 of last year.
Without implementation in the law and enforcement on the ground, however, the targets will remain unmet.
Earlier this year, Askolani said the government was preparing for the excise to be implemented in 2025, if not in 2024.
“We can adjust the [implementation date], because a policy must consider the conditions on the ground,” he said in Jakarta on June 10, as reported by Bloomberg Technoz.
The planned excise is aimed at countering excessive sugar consumption to curb rising obesity and diabetes rates in the country, as well as to bolster state revenue.
Nearly 19.5 million out of 180 million people aged 20 to 79 in Indonesia suffer from diabetes, according to a 2021 estimate by the International Diabetes Foundation (IDF).
The figure has almost doubled from the 10.7 million recorded in 2019.
Studies have suggested that people who regularly drink sugary beverages, meaning up to two servings per day, have a 26 per cent greater risk of developing type 2 diabetes. - The Jakarta Post/ANN
