Would a tax on processed foods protect health in Indonesia? New research may surprise you.
With TWCF funding, the Center for Indonesian Policy Studies (CIPS) aims to bridge the gap in understanding trade's social and regional impacts in Indonesia through a series of five econometric studies.
As part of this series, CIPS recently published a study by Arianto Patunru of CIPS and Anzika, independent researcher that highlights how a nuanced policy approach — one that considers regional and demographic differences — is essential for promoting a healthier Indonesia without compromising food security in Indonesia.
We asked the authors to share key findings from their working paper, Trade and Health: Evidence from Indonesia.
EXPLORE KEY TAKEAWAYS FROM THE STUDY BELOW; DOWNLOAD THE FULL WORKING PAPER HERE.
This study explores the intersection of trade policies and public health outcomes. The research provides a comprehensive analysis of how food imports affect nutritional status across different population groups in Indonesia.
Indonesia faces a dual public health challenge—rising obesity rates and persistent malnutrition. Between 2000 and 2020, the proportion of overweight and obese Indonesian adults doubled. Among children, one in five primary school-aged children and one in seven adolescents are overweight or obese. This rise in obesity has been attributed to the increased availability and affordability of processed foods, including instant noodles and sugary drinks. At the same time, millions of children continue to suffer from malnutrition, with around 30% experiencing stunting and 10% classified as wasted.
Source: Data from Riskesdas.
To address these issues, policymakers have proposed interventions such as an excise tax on sugar-sweetened beverages and import restrictions on certain food products. While these measures aim to promote healthier consumption patterns, they could also have unintended consequences—particularly for individuals with a normal Body Mass Index (BMI) who rely on food imports for nutritional diversity. This article explores the complexities of food trade, public health, and the unintended consequences of restrictive policies.
Indonesia is heavily reliant on food imports to meet its dietary needs. Key imports include wheat, sugar, dairy products, and meat, as domestic production struggles to meet demand. The country is one of the world’s largest wheat importers, as it lacks the climate necessary for large-scale cultivation. Sugar imports have also increased as domestic output fails to satisfy consumption needs.
Source: United Nations Food and Agriculture Organization (FAO).
Government policies have often equated food sovereignty with food security, leading to protectionist measures such as import bans and high tariffs. However, these interventions have not necessarily improved domestic food availability. Instead, they have contributed to persistently high food prices, making nutritious foods less affordable, particularly for lower-income households. For example, rice prices in Indonesia remain consistently higher than those in neighboring countries due to import restrictions and inefficiencies in domestic production.
Research analyzing the relationship between food imports and health outcomes in Indonesia presents a nuanced picture. While imported processed foods are often blamed for rising obesity rates, they also serve as an accessible source of calories for undernourished populations. Thus, food imports do not uniformly harm public health; their effects vary based on factors such as income level, regional access to food, and dietary habits.
Source: The Indonesian Household Survey (Susenas).
A closer examination of BMI categories reveals that imported food affects different groups in different ways. Unhealthy food imports—such as sugary snacks and processed foods—are associated with rising obesity rates but also provide essential energy for underweight individuals. Meanwhile, imports of healthier foods, such as fruits, vegetables, and lean proteins, tend to have a positive impact across all BMI groups. Data from Indonesian health surveys indicate that regional and demographic differences further shape the impact of food imports. For instance, while increased vegetable and fruit imports improve BMI outcomes for all groups, they have a stronger effect on men. Similarly, milk consumption is linked to higher overweight prevalence among both men and women but is particularly associated with obesity in females. These findings highlight the need for targeted, rather than blanket, trade and health policies.
Restricting food imports to combat obesity and malnutrition may lead to unintended negative consequences. Policies that increase food prices can disproportionately affect lower-income populations, who already spend a significant portion of their income on food. Additionally, given Indonesia’s dependence on imports for staple foods such as wheat and sugar, abrupt restrictions can disrupt supply chains, leading to shortages and price spikes. Evidence suggests that trade restrictions could exacerbate existing nutritional disparities. For individuals with a normal BMI, imported foods contribute to a balanced diet. Limiting access to affordable, calorie-rich foods may lead to food insecurity, particularly in rural areas where diverse food options are already limited. Thus, any policy aimed at reducing BMI abnormalities must be carefully designed to avoid unintended harm to other population groups.
The study found that while reducing food imports may help address BMI abnormalities such as obesity and stunting, it could also negatively impact individuals with normal BMI. Instead of assessing raw import volumes, the study used calorie-equivalent figures to evaluate the impact of food imports. The findings indicate that food imports influence different BMI categories in varying ways, reinforcing the need for balanced trade policies. These insights align with global research showing that exposure to imported foods has complex effects on public health outcomes. Indonesia’s heavy reliance on imported staple foods means that restrictive trade policies may contribute to food price volatility, affecting affordability and accessibility for vulnerable populations. A more holistic policy approach—one that considers trade, nutrition, and economic stability—is essential for addressing Indonesia’s food security and public health challenges. This reinforces the broader argument that while trade policies can influence health outcomes, they must be designed carefully to avoid unintended negative consequences. Rather than imposing blanket restrictions, policies should take into account regional disparities, nutritional needs, and economic realities to ensure both health and food security objectives are met.
The relationship between food trade and health is highly complex, making one-size-fits-all policies ineffective. Socio-cultural differences, dietary habits, and regional economic disparities all influence how imported foods impact public health. Rather than implementing broad import restrictions, policymakers should consider more nuanced strategies that balance trade and health objectives.
A more effective approach to food and trade policy should incorporate targeted interventions that address specific health risks while ensuring continued access to nutritious foods.
Potential strategies include:
● Targeted Taxes on Harmful Products: Instead of restricting all food imports, excise taxes on specific unhealthy products, such as sugar-sweetened beverages, could help reduce obesity rates while maintaining access to essential foods.
● Promoting Nutritional Education: Encouraging healthier eating habits through public awareness campaigns can empower individuals to make informed dietary choices.
● Ensuring Food Accessibility for All BMI Groups: Policies should aim to maintain a diverse food supply that supports individuals across different BMI categories, ensuring both affordability and nutritional adequacy.
● Encouraging Domestic Agricultural Innovation: Instead of restricting imports, investments in domestic agriculture could improve food self-sufficiency and affordability without limiting consumer choices.
Indonesia’s food trade policies must strike a careful balance between public health goals and economic realities. While unhealthy food imports contribute to rising obesity rates, they also provide essential calories for undernourished populations. A nuanced policy approach—one that considers regional and demographic differences—is essential for promoting a healthier Indonesia without compromising food security. Rather than broad trade restrictions, a combination of targeted interventions, nutritional education, and strategic investment in domestic agriculture can lead to more effective and equitable health outcomes. By crafting policies that address the needs of all BMI groups, Indonesia can navigate the complex interplay between trade and public health while ensuring a sustainable and diverse food supply for its population.
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