Jakarta. The Indonesian stock market is set to face significant hurdles in 2025 with the introduction of a 12 percent value-added tax (VAT) starting January 1. This policy is expected to impact various economic sectors, particularly those reliant on domestic consumption, such as retail, automotive, and property.

Hendra Wardana, Founder of Stocknow.id, warned that the VAT hike would deal a heavy blow to consumer purchasing power. “Sectors dependent on secondary and tertiary consumption will face significant pressure. With weakened purchasing power, the potential for declining sales and profits is very real,” Hendra told Investor Daily, the Jakarta Globe's sister publication.

Retail and Automotive Hit Hard
According to Hendra, the retail and automotive sectors are among the most vulnerable. Retailers targeting the middle class, such as Mitra Adiperkasa (MAPI) and Ace Hardware Indonesia (ACES), are likely to see revenue declines.

Similarly, Astra International (ASII), a key player in the automotive industry, is expected to experience additional challenges following earlier hits from rising fuel prices and economic uncertainty.

Property Sector Under Pressure
The property sector, including developers such as Bumi Serpong Damai (BSDE), Summarecon Agung (SMRA), and Ciputra Development (CTRA), faces difficulties in maintaining project appeal. Higher housing and construction material costs due to the VAT increase may deter new property sales.

Transportation, Logistics, and Other Sectors
The transportation and logistics sectors, including companies like Garuda Indonesia (GIAA), Adi Sarana Armada (ASSA), and Wahana Express (WEHA), are projected to see significant operational cost increases. Without efficiency improvements or higher service rates, profit margins could be squeezed.

Telecommunications and infrastructure sectors, including Telkom Indonesia (TLKM), XL Axiata (EXCL), and Indosat (ISAT), might face reduced demand for services. Meanwhile, infrastructure projects could encounter financing challenges due to the additional tax burden.