Why do Indonesians pay three times as much food tax as Europeans?
Indonesia’s drive for food self-sufficiency is costing consumers tens of billions of dollars and has led to the highest rice prices in Southeast Asia
For years, politicians and media luminaries alike warned successive Indonesian democratic governments that removing fuel subsidies would lead to widespread civil unrest, similar to that which eventually triggered the downfall of the long-serving President Suharto.
No-one seemed to notice when new President Joko Widodo did just that soon after coming to power in November 2014, nothing happened, not even a few burning tyres which had once scared off his predecessor, Susilo Bambang Yudhoyono.
So what to make of a total absence of media attention – or public reaction – to recent World Bank revelations that Indonesia’s drive for food self-sufficiency is costing consumers tens of billions of dollars and has led to the highest rice prices in Southeast Asia?
“The whole food policy is screwed up,” says a former senior Indonesian trade official, pointing to the government’s ideological opposition to food importation. “The Ministry of Agriculture gets away with murder. The public is being lied to in a big way.”
Recent research by the Organisation for Economic Cooperation and Development (OECD) found Indonesians were “taxed” the equivalent of US$98 billion between 2013 and 2015 as a result of import restrictions and government market and agricultural interventions.
Last year alone, the cost was estimated at US$36 billion, compared with the US$22 billion collectively levied on consumers across the 28-nation European Union (EU), whose agricultural policies are a constant source of complaint.
