Jakarta, Indonesia – The Indonesian Trade Ministry has taken a strong stance against illegal imports by destroying goods worth $1.3 million on Monday in West Java. The destroyed goods included cellphones, electric pots and pans, car washing machines, and alcoholic drinks with an ethyl alcohol or ethanol content ranging from 5% to 20%.
This move is part of the government’s crackdown on illegal imports, a major issue that has plagued the country for over 15 years. Experts believe that Indonesia’s unpreparedness for the ASEAN-China Free Trade Agreement signed 15 years ago is the root cause of this issue.
Trade Minister Zulkifli Hasan stated that the destroyed goods did not comply with state regulations and lacked necessary documentation such as a surveyor’s report, goods registration number, or import approval. They also exceeded import quotas or failed to meet Indonesian national standards.
This is the third operation conducted by the Trade Ministry, following previous operations at the Cikarang customs and excise storage area in West Java and Jakarta’s Cengkareng Port.
In August, the Trade Ministry revealed that $2.9 million worth of illegal imports were stored at the Cikarang facility. The ministry confiscated 20,000 textile rolls, while the National Police seized 1,883 bales of used clothing and customs officers at Tanjung Priok port seized 3,044 bales of used clothing. Additionally, hundreds of carpets, towels, cosmetics, footwear, and over 6,500 electronics were also seized.
Since its establishment in July, the Anti-Illegal Imports Task Force has been actively investigating illegal import schemes, collecting data, and seizing illegal goods.
The head of the Indonesian National Police’s criminal investigation unit, Wahyu Widada, highlighted the negative impact of illegal imports on the country. He said, “Illegal imports not only harm the country in terms of revenue loss but also have an adverse effect on small and medium-scale entrepreneurs.”
Mohammad Faisal, executive director at the Center on Reform of Economics, links the current problem to Indonesia’s unpreparedness when it signed the ASEAN-China Free Trade Agreement 15 years ago. He explained that the country’s domestic industries were not equipped to compete with China’s highly competitive products in the local market. Indonesia’s large domestic market and low trade barriers at the time made it easy for foreign suppliers to enter.
Recent data from the Ministry of Cooperatives and Small and Medium-sized Enterprises (SMEs) shows that approximately 50% of imported textiles and textile products are unregistered. This means that the state is losing out on $399 million from unpaid taxes and excise duties.
In 2022, China exported $3.95 billion worth of textiles to Indonesia, but only $2.04 billion of Chinese textile imports were recorded. This results in a significant financial loss, equivalent to the potential creation of 67,000 jobs and over $762 million in gross domestic product. Indonesia’s GDP in 2023, according to the World Bank, was $1.37 trillion.
Zulkifli emphasized one of the major obstacles in fighting illegal imports is the presence of an underground economy. The Minister of Cooperatives and SMEs, Teten Masduki, stated that almost 30% to 40% of goods sold in Indonesian markets are involved in the underground economy, which means the state does not receive taxes on them.
As a result, Zulkifli pointed out that Indonesia’s tax ratio is lower than other developed Asian nations such as South Korea, Japan, and China. He said, “Imagine if we sent illegally imported goods to South Korea or China. Don’t expect that to happen; it’s impossible. That’s why these nations can become developed countries. If our “house” continues to get burglarized, how can we move forward?”
In June, Zulkifli announced a plan to impose steep tariffs of up to 200% on some products. While initially announced as an import duty on Chinese goods, the minister clarified that the duties would apply to all countries.
The Retail and Tenant Association of Indonesia has uncovered shops suspected of selling illegally imported goods online across North Sumatra to East Java. Some even have opened physical shops at Jakarta’s wholesale shopping centers.
Budihardjo Iduansjah, the association’s chairman, stated, “These Chinese entrepreneurs store their goods at local warehouses and sell them online. But now, many have started
