Indonesia's attempt to produce more items onshore is already backfiring, with businesses warning that MacBook Pro supply could run out by April. According to sources, Michelin tires and chemicals imported from Europe may run short in the coming months due to a March 10 law intended to curtail imports of thousands of products.
Instead of encouraging global corporations to build up production plants onshore, the move has forced them to contemplate pulling back or scrapping expansion plans, said the persons, who requested anonymity due to sensitive information.
President Joko Widodo has welcomed international investment but criticized imports that compete with indigenous products. According to people who requested anonymity, the import hurdles have incensed top executives at Apple and Michelin and prompted business chambers from the US to South Korea to write letters to his government to review the matter.
Apple and Indonesia's trade and industry ministries did not reply to calls for comment. Michelin has been working with groups and other companies with a similar situation and hopes the government will act shortly. In an emailed response to Bloomberg, Michelin said it wants to fully integrate Indonesia into its global value chain, therefore trade openness is important.
Laptops and hazardous chemicals are among the 4,000 objects restricted by the complicated law. The persons said companies must receive a letter of recommendation from the Ministry of Industry to get import permits, but the procedure is onerous, requiring tenancy agreements and annual predictions of things they plan to import.
They added the government may use the estimates to set import quotas for certain products, which the corporations see as a way to encourage them to build production facilities onshore to gain an advantage or lose out to rivals.
Despite several company inquiries, the government hasn't provided clarification on implementation since the rule was passed into law in December, individuals said. They stated they only realized the intricacy and repercussions after the legislation was enacted, causing chaos as they arrange budgets, logistics, and transport for items.
Firms are now relying on Coordinating Investment and Maritime Affairs Minister Luhut Panjaitan, who has Jokowi's ear, to relax the regulation. The persons said Panjaitan privately warned that the measure could harm Indonesia's commercial reputation and economic interests.
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