MacBooks running low after import restrictions
Indonesia’s move to get more goods produced onshore is already starting to backfire, with companies warning that supplies of products including Apple’s MacBook Pro could start to run out as soon as the end of April.
Other goods including Michelin tyres and chemicals shipped from Europe may run out over the next few months because of the rule enforced from March 10 that is seen as an attempt to curb imports of thousands of products, according to people familiar with the matter.
While the move was meant to spur global companies to set up production plants onshore, it had instead pushed them to consider scaling back or cancelling plans to expand operations, said the people, who asked not to be named discussing sensitive information.
President Joko Widodo has presented himself as business-friendly to foreign investors, but he has railed against imports that compete against local products. That tension was coming to the fore as the import hurdles had ignited furore among executives at companies from Apple to Michelin and spurred business chambers from the US to South Korea to write letters to his government to review the matter, said the people.
Representatives from Apple as well as Indonesia’s ministries of trade and industry did not immediately respond to requests for comment.
Michelin said it had been working with associations and other companies facing a similar issue and was optimistic the government would act soon to fix the problem. “Michelin aims at integrating Indonesia fully into its global value chain, and that is why openness to trade is key to us,” it said in an emailed response.
The rule effectively restricts imports of about 4,000 products, including finished goods such as laptops and raw materials like hazardous chemicals. To get import permits, companies must get a letter of recommendation from the Ministry of Industry, but the process was onerous – requiring firms to submit tenancy agreements and annual forecasts of items they intended to bring into the country, the people said.
The forecasts might be used by the government to set import quotas for certain products, which the companies viewed as being meant to spur them to set up production facilities onshore to get an upper hand or lose out to rivals because of the quota mechanism, they said.
Despite multiple queries from the companies, the government did not give any clarity on the implementation since the rule was signed into law in December, the people said. Firms only understood the complexity and ramifications once the regulation was enforced, which was throwing companies into turmoil as they had to plan budgets, logistics and transport for the goods, they said.
Firms were now turning to Coordinating Investment and Maritime Affairs Minister Luhut Panjaitan, who is seen as someone who has Jokowi’s ear, to persuade him to ease the rule.
In private, Luhut described the rule as potentially injuring Indonesia’s interests, the people said. A representative for Luhut did not immediately respond to a request for comment.