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Jul 21
2024

Indonesia Imposes Import Duties to Protect Industry

Editorial Staff
Jul 3, 2024

Image: Rio Lecatompessy via Unsplash

Indonesia plans to implement safeguard duties ranging from 100 to 200 percent on various imports, including clothing, footwear, cosmetics and ceramics, in an effort to protect its domestic industries, Reuters reported.

“If we are flooded with [imported goods], our micro, small and medium enterprises could collapse,” commented Trade Minister Zulkifli Hasan .

According to Zulkifli, the duties that will soon be imposed could impact imports of footwear, clothing, textiles, cosmetics, and ceramics. Data from the statistics bureau indicate that Indonesia primarily imports these goods from China, Vietnam, and Bangladesh.

One of the industries expected to be impacted is the labor-intensive textile sector, which employs approximately 3.9 million people in Indonesia, accounting for nearly 20% of the country’s total manufacturing workforce. The main external competitor of Indonesian companies in this industry is China.

Since 2019, 36 textile factories in Indonesia have ceased operations, and 31 others have experienced significant layoffs, according to the Nusantara Trade Union Confederation (KSPN). KSPN also reported that nearly 50,000 workers in the sector have been laid off since the beginning of this year.

Financial difficulties have also affected Sritex, one of Indonesia’s largest textile and garment producers. The company reported a revenue of US$325 million last year, a 38% decrease from its US$524.6 million revenue in 2022.

“There is an oversupply of textiles in China, which causes price dumping, where these products are targeted mainly to countries outside Europe and China that have loose import regulations, such as no anti-dumping import duties, no barrier tariffs or non-barrier tariffs, and one of them is Indonesia,” Welly Salam, Financial Director at Sritex, said.

Between January and May this year, Sritex also laid off 3,000 workers, or 23% of its total workforce, the company reported.

Indonesia also introduced a regulation last year to enhance the monitoring of over 3,000 imported food ingredients, electronics, and chemicals. However, the regulation was repealed after domestic industries claimed it impeded the flow of essential imported materials needed for their operations.

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