Ahead of Eid this year, the dominance of imported goods, from fabrics to ready-made clothing, continues to erode the market share of the local textile industry. According to the Indonesian Filament Fiber and Yarn Producers Association (APSyFI), this condition is worsening the decline of the domestic industry which has not shown any signs of recovery. The General Chairperson of APSyFI, Redma G. Wirawasta, said that hopes are now pinned on the start of school in June, with the note that the government can take serious steps to reduce the rate of imports.
Redma highlighted the policies that triggered the surge in imported goods, especially Permendag Number 8/2024 which relaxed import regulations. He proposed that technical regulations such as Permendag Number 36/2023 be re-enacted to protect the domestic market. This step is expected to provide opportunities for small and medium industries (IKM) to recover, which will gradually also have a positive impact on the fabric, yarn, and fiber sector.
In addition to policy revisions, supervision of the Directorate General of Customs and Excise is also a major highlight. The rampant illegal imports flooding the domestic market have exacerbated the pressure on textile industry players. Redma explained that this industry actually has great potential to provide significant economic added value. As an illustration, raw materials such as PX (Paraxylene) at a price of IDR 5,000 per 0.30 kg can be processed into finished clothing worth IDR 104,000 per kilogram, reflecting a value increase of up to 200%.
In 2023, domestic garment consumption needs were recorded at 2.26 million tons with a consumption value of US$ 15.18 billion. This shows that the textile industry has an economic value of up to IDR 235 trillion per year. In terms of tax, this sector also makes a large contribution through VAT of 11%, which is estimated to generate state revenues of up to IDR 25 trillion per year. This amount does not include taxes on cotton imports, which in 2023 reached 611,550 metric tons with potential tax revenues of around IDR 18.95 trillion per year.
Redma emphasized that to protect the sustainability of the textile industry, policies are needed that favor local products. He suggested that the government prioritize the use of domestic products in strategic projects, including the procurement of school uniforms and other needs. Otherwise, the increasing pressure from the flood of imports and smuggled goods could cause local factories producing fabric, yarn, polyester, PTA, and Paraxylene to become increasingly depressed and threatened with bankruptcy.