Tuesday, July 16, 2024

Positive outlook for Indonesia’s textile industry amid regulatory challenges

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Indonesia’s textile industry has remained resilient despite facing significant challenges due to new trade regulations, with industry leaders advocating for systemic improvements to secure a sustainable future.

In light of recent trade regulations, the Indonesian Textile and Filament Yarn Producers Association (APSyFI) has raised concerns about the impact of the Ministry of Trade’s Regulation No. 8/2024 on the national textile industry.

APSyFI Chairman Redma Wirawasta said that the new regulation has exacerbated issues related to bulk import practices by unscrupulous customs officials.

Redma highlighted that the illegal importation of textile and textile products (TPT) has become evident through discrepancies between data from the Statistics Indonesia (BPS) and China Customs.

According to him, these discrepancies have surged by 166.66 percent, from US$1.5 billion in 2020 to US$4 billion last year (Rp65.8 billion). He attributed this growth to the involvement of certain customs officials in facilitating bulk imports through manipulation of red and green import channels at ports.

Redma argued that this systematic issue has led to widespread layoffs and company closures within the textile industry over the past two years.

Despite several attempts to propose improvements, including the implementation of an AI Scanner system for container inspections, these efforts have been rejected by the Ministry of Finance.

Additionally, Redma voiced concerns about the practice of dumping by Chinese exporters, which involves selling products at a lower price with government support to gain market share.

Despite Finance Minister Sri Mulyani acknowledging these concerns, proposals for market protection measures, such as extending the safeguard regulation, have been stalled for over a year.

Vice Chairman of the Indonesian Textile Association (API), David Leonardi, demanded the revocation of Regulation No. 8, citing the closure of 30 textile companies and the layoff of 7,200 employees since its implementation in May 2024. The Confederation of Nusantara Trade Unions (KSPN) also reported 13,800 layoffs in the textile and apparel industry since January.

David emphasized that if these issues persist, Indonesia risks becoming a trading rather than a producing nation. The Ministry of Trade, however, maintains that Regulation No. 8/2024 still requires technical considerations for TPT imports and does not impact the textile industry’s operations directly.

Trade Minister Zulkifli Hasan reaffirmed that the regulation does not affect the requirements for importing raw materials for the textile industry and is not linked to the industry’s recent challenges. He said that technical requirements for TPT remain unchanged, ensuring continued regulatory oversight.

Despite these challenges, the textile industry leaders remain hopeful and are advocating for systemic improvements to secure a sustainable and competitive future for Indonesia’s textile sector.

Journalist IBP

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