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Fiscal Fees and the Indonesian Balance of Trade

ASEAN Push for Indonesia to Eliminate the Fiscal Fee Gives Concern for National Balance of Trade in Travel.

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Led by Malaysia, fellow members among the 10 member Association of South East Asian Nations (ASEAN) are repeating their call on Indonesia to eliminate the Rp. 1 million fiscal fee levied on all Indonesians and Residents each time they travel abroad. Citing the fee as an impediment to inter-regional efforts to grow tourism and trade, ASEAN partner nations eager to tap into the large potential outbound market of travelers from Indonesia want to see the fee abolished.

The Government has signaled cautious approval of the request to eliminate fiscal charges, pleading for time and a gradual approach to ending the charge. In a few selected ports in Indonesia - such as Riau, Batam and Pontianak – Indonesians traveling to neighboring countries are already reportedly exempted from paying the Rp. 1 million fee. Meanwhile, the Government has countered those demanding faster implementation, pointing out that both Thailand and the Philippines still charge an 'exit tax' on their nationals traveling overseas.

A Negative Balance of Trade in Travel?

Always intended to encourage taxpayer registration and discourage Indonesians from traveling abroad, the Rp. 1 million fiscal charge has been increased 3 times since its initial introduction. An initial Rp. 250,000 fee was doubled to Rp. 500,000 and then, later, doubled again to the current Rp. 1 million level. Charged to Indonesians and foreigners residing in Indonesia, the Rp. 1 million fee is, in fact, a pre-payment on taxes and can be claimed back from payroll taxes due the government by an employer.

Statisticians from the Government are concerned, however, that any moves to encourage travel abroad by Indonesians at a time when inbound tourism figures to Indonesia are down will result in a negative balance of trade in travel.

The statisticians concerns are not unfounded with the numbers telling a compelling story. The estimated surplus in trade between inbound and outbound travel totaled $3.986 billion in 2001, a total that decreased dramatically by 66.6% to 1.342 billion in 2002. Last year, Indonesia's balance of trade in tourism stood at only $841 million, down a whopping 78.9% from the figures just 2 years before.

At these rates, even a modest increase in outbound travel by Indonesians going abroad could place the Country's balance of trade in travel deeply into the red.

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