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Impact of Indonesian Textile Market Flooded with Chinese Products, Minister of Industry Evaluates a Number of Rules

BULETIN TEKSTIL.COM – Agus Gumiwang, Minister of Industry (Menperin), focuses on the textile and textile products (TPT) business, which is now facing a flood of Chinese imports.

According to him, this occurred owing to a buildup of stocks in China as a result of decreased demand from the United States and Europe. As a result, they are seeking for additional markets to accommodate increased output, particularly Indonesia.

He said that this circumstance arose as a result of Indonesia’s very consistent economic growth and enormous population. “This makes us a potential market destination for TPT products from China,” he remarked.

According to the Minister of Industry, this circumstance poses a danger to the local TPT sector. In response, the government promptly implemented a program of domestic market protection. This was done to mitigate the effects of decreased demand for Indonesian textiles and probable Chinese dumping.

We have heard that the fiber industry has begun to reduce production. This is due to the influx of synthetic fibers and filaments, as well as textiles, into the local market,” noted the Minister of Industry.

The impact on the TPT industry’s performance has also resulted in a major reduction in workforce. Until present, 70,000 people in the textile manufacturing sector have been laid off (PHK).

Ministry of Industry Mitigation Steps Through Policy

Faced with this issue, the Ministry of Industry (Kemenerin) will implement a short-term mitigation program by boosting oversight of the domestic TPT market and collaborating with key parties.

In terms of long-term policy, the Ministry of Industry will preserve the domestic textile market, improve textile industry performance, and carry out textile industry interconnection from upstream to downstream.

The domestic market security policy that has been implemented is in the form of Safeguard Measure Import Duty (BMTP) for yarn, fabric, curtain, and carpet products, as well as Anti-Dumping Import Duty (BMAD) for polyester staple fiber (PSF) products,” he explained.

In addition, the Ministry of Industry proposed changes to the limited prohibition policy (lartas) through Letter Number B/312/M-IND/IND/XII/2022 dated 28 December 2022 and Letter Number B/210/IKFT/IND/IV/2023.

“The Ministry of Industry proposed changing the context, withdrawing supervision from the post border to the border for apparel products, clothing accessories, and textile finished goods,” he added.

The Ministry of Industry will also strengthen oversight of the implementation of Minister of Trade Regulation Number 18 No: 187/RILIS/IND/06/2023 of 2021 in conjunction with Number 40 of 2022 concerning Export Prohibited Goods and Import Prohibited Goods, particularly for used clothing and other used goods (HS 6309.00. 00).

The Ministry of Industry will therefore boost its supervision of circulating products in accordance with Minister of Trade Regulation Number 25 of 2021 on the Stipulation of Products Required to Use or Complete with Indonesian Language Labels.

The Ministry of Industry also proposes revising Minister of Trade Regulation No. 50 of 2020 on Provisions for Business Licensing, Advertising, Guidance, and Supervision of Business Actors in Trading Using Electronic Systems. This policy is expected to help improve the domestic TPT industry’s condition,” stated Agus.

Another thing the Ministry of Industry will do is create industry standards right now, including Technical Specifications (ST) and Procedure Guidelines (PTC). This must be done soon because the length of ST and PTC preparation is limited.

The purpose of ST and PTC preparation is to give business predictability, smoothness, and efficiency in local and international trade operations.

By carrying out the preparation of ST and PTC, it is hoped that it can increase national competitiveness, create fair and transparent business competition in trade, and provide certainty in doing business,” Agus stated.

The Ministry of Industry will also assess the existence of Bonded Logistics Centers (PLB), of which there are 106 in 159 sites. It is necessary to evaluate this PLB since it is claimed that there are anomalies in the release of imported products from the PLB that are not in conformity with the rules of PMK Number 28/PMK.04/2018 j.o. PMK Number 272/PMK.04/2015 Concerning Bonded Logistics Centers.

This can be seen from the large number of imported apparel in e-commerce at much cheaper prices and arriving at consumers quickly,” he said.

The Indonesia Textile Association (API) has written a letter to the Main Director of PT Perusahaan Listrik Negara (PLN) (Persero) outlining suggested power payment alleviation incentives for the TPT sector.

The relief takes the form of relaxing the payment of electricity bills, determining the amount of late payment fines at a reasonable rate, establishing a single electricity tariff (rates outside of peak load times for industries that operate 24 hours), providing electricity tariff relief, and easing the use of Solar Power (PLTS).

In addition, the Ministry of Industry has implemented programs such as the Export Improvement Program, Import Control, and Increasing Industrial Competitiveness.

The Export Increase Program is carried out through boosting Free Trade Agreement (FTA) collaboration with the European Union and the United States, as well as enhancing market-finding promotions.

Meanwhile, the Import Control Program was pursued through tariff harmonization, the implementation of BMTP and BMAD trade barriers, the allocation of Import Approval (PI) and Industrial Capability Verification (VKI) allocations in the context of commodity balances, and the development of the Indonesia Smart Textile Industry Hub (ISTIH).

In order to boost industrial competitiveness, the government is developing and training industrial human resources (HR), reorganizing industrial machinery and equipment, and subsidizing specific natural gas prices (HGBT) for the textile industry’s upstream.

Policies adopted to protect the domestic market are expected to reduce the impact of the global recession on the national economy in the form of reduced demand and protect the domestic market from attacks on goods originating from imports, particularly from China,” said the Minister of Industry.

The TPT industry’s GDP growth rate in the first quarter of 2023 was 0.07 percent, falling from the previous year’s pace of 3.61 percent year on year (yoy).

The TPT industry’s GDP contribution to national GDP in the first quarter of 2023 fell to 1.01 percent from 1.10 percent in the same time in 2022.

A decrease in textile industry utilization occurred in May 2023, namely to 67.59 percent. Similar circumstances prevailed in the garment business, where utilization fell to 74.79 percent,” he explaned.

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