AUSTRALIAN Government and industry representatives will meet with Indonesian officials later this week to gain an understanding of the rationale behind Indonesia’s surprise announcement that a new 10 percent tax will be applied to cattle imports.
As first reported on Beef Central on Friday last week, Indonesia’s Ministry of Finance has imposed a Value Added Tax of 10pc on feeder cattle – interpreted to mean both imported and domestic stock.
Industry and government are still trying to determine if the VAT will be applied to boxed beef imports as well, but at this stage, there is no suggestion a similar tax burden will be applied to chilled or frozen meat.
“The tax on cattle will only lead to increased price pressures for beef in the local Indonesian market,” a trade source told Beef Central yesterday.
It remains uncertain what impact, if any, the VAT tax on cattle will have on the balance between Indonesia’s live cattle and boxed beef imports.
As reported earlier this month, the Indonesian government has released the 2016 quota for live cattle imports, totaling around 600,000 head, with 198,000 allocated for the first quarter – all from Australia.
The co-ordinating Minister for Economic Affairs has indicated that the quota may still be reviewed later in the year, most likely after the Idul Fitri period around Ramadan, a period of high consumption. Live cattle quota numbers fell short of the 780,000 head proposed by the local feedlot industry representative body, APFINDO.
The ministry has also indicated that Indonesia’s 2016 beef imports are likely to be around 50,000 tonnes.
While there is no definitive quota for boxed beef imports, allowable cuts are heavily restricted, and another limiting factor could be the 3 percent local cattle absorption requirement for beef importers.
As reported in Beef Central’s recent calendar year export summary, Australia’s 2015 beef exports to Indonesia totaled 39,134 tonnes, which local analysts suggest represented about 78pc market share for imported beef.
In other news in Indonesia, media reports again suggest that the government is considering ‘regionalisation’ for beef importers that would allow product to flow from FMD areas within countries not free of FMD such as Brazil. The matter is still being considered within the Constitutional Court.