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APSyFI: The national textile industry is headed for a trade deficit, 2018 exports grow 1% and imports grow 14% (yoy).--IKATSI: The growth of the national textile industry is still hampered by floods of imports, Indonesia needs a clothing security law.

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Home arrow Latest News arrow Pro Importer Policy, TPT Industry Suffers

Pro Importer Policy, TPT Industry Suffers PDF Print E-mail
Written by Maizer   
Tuesday, 06 August 2019

Trade policies considered to be more pro to trader importers were blamed as the culprits of the trade balance deficit. Secretary General of the Indonesian Filament and Fiber Producers Association, Redma Gita Wirawasta stated that 2018 was the worst trading performance in the era of President Jokowi's . "And it looks like will continue in 2019, because the balance sheet growth is still negative," he stressed.


Redma explained, although  non-oil and gas trade balance was still positive, the growth was negative coupled with the already negative oil and gas balance. "So it is not strange if in the next 2 years it is certain that the non-oil and gas balance will be negative so that it will increase the trade deficit," he added.


According to Redma, the desire of the President to increase exports was interpreted incorrectly by some parties by providing raw material import facilities. "We see that in the end of 2017 there are many rules that give a red carpet to imported products on the grounds of facilitating the entry of raw materials, as a result in the year imports continue to rise non-oil increase 19.7% while exports only rise 6.4%" he said.


Redma added,  government should prioritize raw materials from within the country because the producers already exist. "As in the textile and textile products sector, manufacturers are able to meet the needs of domestic fabrics, if the Ministry of Trade 64 of 2017 opens imports like this so the fabric producers are depressed," he explained.


"If importers will always say that our domestic fabric supply is lacking, because indeed they can benefit from it," he said. According to him, importers have never thought about the industrial sector which has been the focus of the government in gaining foreign exchange and absorbing labor. "Even this group of importers does not care if our trade balance is deficit, with the pretext of raw materials for SMIs they try to continue to maintain pro-import policies such as PERMENDAG 64 2017," he added. "So the problem is simple, the government will build a domestic industry or want to be pro-import," he concluded.


Save the National Textile Industry


Previously, Deputy Secretary of the Indonesian Textile Association (API) of West Java, Rizal Tanzil conveyed complaints that weaving and knitting SMEs had reduced production by 30% -40% so that production utilization was only 50% due to the flood of fabric imports facilitated by PERMENDAG 64 in 2017.


Rizal explained that PERMENDAG 64 2017 has provided unlimited and uncontrolled import facilities to traders holding General Import Identification Number (API-U). "Imports of raw materials from API-U which are supposed to be distributed to IKM apparently are mostly directly sold in the market, even now they are starting to enter the finished goods," he said.


"The SMEs weaving and knitting in the Majalaya region requested that the Minister of Trade 64 be revoked immediately" continued Rizal. For this reason, he asked President Jokowi to explicitly side with domestic producers. "If the government's concern is IKM, improvement of the trade balance and employment in the labor-intensive sector, President Jokowi must immediately order the revocation of PERMENDAG 64," he said.


Confirmed separately, Chairman of the Indonesian Textile Expert Association (IKATSI), Suharno Rusdi, agreed that the current condition of the textile industry was quite alarming. Based on information from most of its members scattered in various TPT industries, currently the warehouse stock is very high. "Even in the second quarter of 2019, around 20 companies no longer extended their contracts of around 36 thousand employees," said Suharno. "This industry must be saved immediately," he stressed.


Suharno explained that the domestic market is huge with consumption growth of around 6% per year. "Our current per capita consumption is 8.13 kg and will continue to grow to more than 12 kg, the transaction value from upstream to downstream in 2018 reaches USD 34 billion, far greater than our export capability which is only USD 13 billion," he said.


IKATSI asked the government not to open imports of raw materials on the grounds of exports or SMIs, amidst the pressure in the import substitution export market is the answer to saving the national textile sector. "Ease of raw materials for export has been facilitated through Bonded Zone (KB) and Ease of Imported Export Purpose (KITE), while raw materials for SMIs can already be supplied by domestic products, some of which are also SMIs, so there is no need for Minister of Trade 64 to open imports for this reason "he explained.


Suharno further stated that IKATSI was trying to push for the birth of the clothing security law as a reference for other legal products related to the textile industry. "At present there are many legal products that do not support the improvement of the performance of the textile industry, with the existence of the Law on Resilience of Law, other legal products related to this industry must refer to this law," he concluded.


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