Indonesia has officially implemented a 12% value added tax (VAT) on luxury goods and services starting on January 1, marking an increase of 1% compared to the previous rate.

Indonesia is planning to roll out incentives for cars with hybrid engines, said Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto.

Domestic consumption is likely to lose steam as consumers face uncertainties, along with changes to shopping trends. Meanwhile, businesses have reported it's increasingly difficult to maintain purchasing power and reduce inventory buildup, said industry insiders and economists.