Businesses Want 10% VAT on Waste Reviewed



Laila Afifa

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  • Plastic waste in the ocean.

    Plastic waste in the ocean.

    TEMPO.CO, Jakarta - Fajar Budiono, secretary general of the Indonesian Plastic Industry Association (Inaplas), requested a review of the 10-percent value-added tax (VAT) on products made from recycled plastic waste. According to Fajar, the amount of VAT is quite high and will slow down the development of the industry.

    He argued that the plastic waste recycling business in Indonesia has experienced shrinking value in the processing of raw materials.

    "The industry picks up garbage from collectors at a certain price, certainly not all become products, there are residues," Fajar told Tempo, Wednesday, June 19.

    In addition to the VAT, there are also problems in districts and cities that do not have the capability of managing waste properly. As a result, the industry must also import sorted plastic waste to be recycled in Indonesia. 

    What has been happening in Indonesia, he said, is that there are more campaigns about stopping waste use, but none about proper waste management.

    Indonesia lacks the industry to manage plastic waste recycling. Industry Minister Airlangga Hartarto once said that only 10 percent of plastic waste in Indonesia is recycled successfully. The ministry targets this capacity to increase to 25 percent.

    This policy comes amidst low investment in the petrochemical industry. As a result, imports are inevitable. According to data from the Central Statistics Agency (BPS), the import of plastic goods and their derivatives—which are downstream products from petrochemical industries—is the fourth biggest in 2018 with a value of US$9.2 billion.

    Justin Wiganda, deputy chair of the Indonesian Plastic Recycling Association (ADUPI), wants the 10-percent VAT abolished completely. He said that the plastic waste recycling industry can produce daily necessities, from shampoo bottles to upholstery and car carpets.

    "If we can lower or erase [the tax], more people would be willing to get involved in the industry," he argued.