A Preview of What’s to Come Under the Imported Film Levy
Higher taxes usually mean higher revenue for the government and more funds available for developing the country.
However, in the case of the new import tax on foreign film distribution rights that was issued last month but has yet to take effect, few people are seeing any benefit.
With foreign film distributors boycotting Indonesia as a result of the new import policy, cinema and film industry players, as well as those whose livelihoods are affected by these industries, are warning of a catastrophic domino effect.
Cinema Industry in Peril
Prominent film figure Noorca Massardi, chairman of the Indonesian Cinemas Association and spokesman for 21 Cineplex, provided a preview of things to come if the government refuses to revoke the policy.
“Every year, cinemas screen 50 to 80 local titles and 100 to 150 foreign titles,” he said. “If no solution is found, Indonesian cinemas will close down one by one.”
First, the livelihood of roughly 10,000 employees of 21 Cineplex, Indonesia’s largest movie theater chain, will be at stake, Noorca said in a statement published by Kompas.
One employee of a South Jakarta cinema said he and his co-workers were all worried about their jobs.
Blitz Megaplex, a more upscale theater chain, is also worried.
Dian Sunardi, head of marketing for Blitz, said the development is particularly worrying for the chain because it plans to open nine new screens in the next three weeks.
“We expect the government to revoke this regulation as it will kill the cinema industry along with the jobs of the people working for it,” she said.
Hurting Malls and Restaurants
The impact of the boycott is expected to reverberate beyond the cinema industry.
Cinemas are considered anchor tenants for shopping malls and are relied on heavily to draw in crowds, said Muhammad Arfan Purnama, a spokesman for Cilandak Town Square.
He added that the mall is already feeling the effect, especially after Oscar-nominated movies “Black Swan” and “127 Hours,” which were supposed to start screening on Friday, were put on hold after the boycott was announced on Thursday.
Arfan said traffic in the popular South Jakarta complex was noticeably lower on Saturday night compared to its usual weekends.
“If the government insists on implementing the new regulation, it will not only impact the cinema industry but also the malls and their tenants, like coffee shops and other restaurants that usually attract movie-going customers,” he said.
Lower Tax Revenue
When the levy comes into effect, the government itself will suffer from lower tax revenues.
Iwan Setiawandi, head of the Jakarta tax office, said on Sunday that cinemas contribute around 40 percent to 50 percent of the Rp 300 billion ($34 million) in entertainment tax collected by the city administration each year.
“Jakarta’s entertainment tax also comes from places such as Ancol theme park, night clubs and restaurants,” he said. “But losing 40 to 50 percent of the entertainment tax is substantial. It’s money we can use to improve health and education facilities.”
Iwan added that 21 Cineplex is the largest contributor to Jakarta’s entertainment tax collections.
“It will likely be even more difficult for the municipal administrations whose entertainment tax relies mostly on cinemas,” he added.
Of course, there is also the understated impact of the boycott — the disappointed fans.
Shafiq, a member of Indo Harry Potter, an online fan community, said they were at a loss over the prospect of not being able to see the final installment of the Hollywood blockbuster series on the big screen.
“Harry Potter and The Deathly Hallows Part 2,” the last of the eight-part movie series, is scheduled for worldwide release in July. For the previous films, special screenings have been held for IHP members, who come dressed as characters from the series.
“Last year, we successfully held a screening of ‘Harry Potter and The Deathly Hallows Part 1’ with 500 participants, and we’re worried we will not be able to do it again,” Shafiq said.
He added that film lovers in general would lose an important source of entertainment, especially since in his opinion, “Indonesian films are often very poor in both quality and content.”
The One Exception
If any group would likely benefit from all this, it is the pirated DVD sellers the government claims it is trying to stamp out.
Nia Dinata, a prominent film director and producer, said it was expected that the boycott would lead to a huge boost in the piracy business in the country.
Because “the culture of going to the cinema will fade as film lovers get used to watching pirated DVDs,” she said, it was likely even fans of Indonesian films would opt to buy bootleg copies instead of going to theaters.
“If the government wants to help to increase the number of Indonesian films and improve the quality of the local film industry, this is not the solution,” she said.