August 7, 2024
JAKARTA – Businesses have called the government to rethink a plan to introduce a cap and impose a tax on certain ingredients used in processed foods, fearing the measures will be burdensome for the food industry, especially for small and medium enterprises (SMEs).
Article 194 of Government Regulation No.28/2024, which serves as the implementing regulation of the 2023 Health Law, stipulates that the government will set a cap for sugar, fat and salt content in processed and fast food in the country, hoping to curb the increasing trend of obesity and diabetes, among other non-communicable diseases.
The same article also paves the way for an introduction of excise on the three ingredients. The Finance Ministry had planned to introduce a tax on sweetened beverages last year, but it was delayed amid pushback from businesses in the sector.
This provision will apply to all businesses, including food served in catering services, hotels, restaurants, canteens, street food stalls and vendors, as well as importers.
Ronald Walla, chair of SMEs at the Indonesian Employers Association (Apindo), anticipated that the rule would burden SMEs with additional costs and red tape.
Meanwhile, he expects the rule will present challenges as many businesses have no idea how to calculate the salt, sugar and fat content in the food they sell.
“We also need to effectively supervise the implementation [of the rule] and to ensure fairness,” he told The Jakarta Post on Tuesday.
He also urged the government to involve businesses in deliberating the implementation of the cap and the excise.
Edy Misero, secretary-general of the Indonesian MSMEs Association (Akumindo), told the Post on Thursday, it feared the excise would incorporate a high rate that could force businesses to hike the prices of their products.
“If we keep increasing the price, [at some point], fewer consumers will be able to buy our products. This is a problem,” Edy said.
The Indonesian Food and Beverage Producers Association (Gapmmi), which represents large scale food producers, declined to comment on the matter.
Bank Permata chief economist Josua Pardede told the Post on Thursday he expected that implementing the excise on processed food products would increase prices for consumers.
This could have quite a significant impact, he explained, considering the consumption of processed food and beverages, which could fall under the category of processed food, is relatively large.
The proportion of processed food and beverages in the country’s annual total food consumption reached 32 percent, according to the National Socio-Economic Survey (Susenas) conducted by Statistics Indonesia (BPS) in March 2023.
BPS noted the food, beverage and tobacco group, along with food served at restaurants, were among the top contributors to inflation last year.
As of Tuesday, the amount of the excise tax and the implementing regulation had yet to be determined.
Nirwala Dwi Heryanto spokesperson at the Finance Ministry’s Directorate General of Customs and Excise (DJBC), told reporters on July 30 that nothing had been decided yet, stressing that the stipulation in the Health Law’s implementing regulation was still a proposal.
He added that any goods could be subject to excise, according to the criteria for excisable goods (BKC).
The 2007 Excise Law states that excise may be levied on goods for which consumption needs to be controlled and circulation monitored or whose usage could negatively impact people or the environment, or simply “for the sake of justice and balance”.
However, presentation material from a senior official at the DJBC on July 19 showed that the government was considering whether to impose an excise on fast foods, but separately on July 25, Nirwala also denied it, stressing that discussion on expanding the excise imposition was academic and nothing concrete would materialize soon.
The World Health Organization (WHO) published on May 6 a study aiming to support the government’s move to issue regulations to eliminate trans fats.
The organization recommended trans fat levels in food of less than 2 grams per 100 g of total fat, but in Indonesia, almost 10 percent of the products surveyed, or around 11 foods contained trans fat levels exceeding these recommendations.
Deputy Health Minister Dante Saksono Harbuwono said in a statement on May 6 that the government welcomed the study and acknowledged the country still lacked data and was tracking the matter.