Agora, Inc. (API) shares plummeted 5.01% on Monday, following concerns over the potential negative impact of Indonesia's planned increase in the value-added tax (VAT) rate.

The Indonesian government aims to raise the VAT rate from 11% to 12% starting January 1, 2025, in a bid to boost state revenues. However, business associations like the Indonesian Textile Association (API) have warned that the VAT hike could further strain consumer purchasing power, which is already weak.

API expressed concerns that the higher VAT rate would lead to increased prices for textile products, making legal imports more expensive. This could drive buyers towards cheaper illegal imports, exacerbating existing challenges faced by the industry from illicit trade. Other business groups like Apindo also cautioned that the VAT increase could force companies to lower production due to weaker demand as costs rise.