The Indonesian Fiber and Filament Yarn Producers Association (APSyFI) revealed that the government's plan to increase import duties to inhibit imports of textiles and textile products (TPT) from China will not be completely effective. This policy is considered less effective as long as there is still an import mafia that is able to pass cheap illegal products into the Indonesian market.
Import Barriers and the Role of the Mafia
The General Chair of APSyFI, Redma Gita Wirawasta, emphasized that although the implementation of Antidumping Duties (BMAD) and Safeguard Measures Import Duties (BMTP) can slightly slow down the pace of imports, the real core problem lies in the performance of Customs and Excise which needs to be improved.
"High import duties, up to 200%, do have a significant impact on the upstream industry. However, that is not the real solution. The right solution is improvements to Customs," said Redma on Wednesday (3/7/2024).
Impact of High Import Duty Rates
According to Redma, high import duties could reduce the interest of Chinese exporters in selling textile raw materials wholesale to Indonesia because the profits obtained would be significantly reduced. "With BMAD/BMTP, the price of goods will be more expensive. Even though it is more expensive, exporters will still have difficulty selling wholesale because they have to add VAT and that is not profitable," he said.
However, for the downstream industry, BMTP is considered ineffective if the gap for TPT imports is still wide open and there is no comprehensive eradication of illegal products. The garment safeguard which is in effect until next October has not been able to close all import gaps, especially for illegal products which are still flooding the market.
Challenges from Illegal Products
Redma noted that the additional fee of IDR 19,000 - IDR 60,000 per piece charged was not effective in reducing the flood of cheap illegal products on the market. For example, garment products such as headscarves are still often found at very cheap prices, namely around IDR 15,000 per piece.
In his view, the Directorate General of Customs and Excise has a crucial role in this illegal import activity. Redma said the import mafia is a group consisting of various parties related to import activities, from permit providers to logistics delivery services that are involved.
Appeal to President Jokowi
Redma emphasized that the import mafia problem could only be resolved by President Joko Widodo because it involved many parties. "And no one can fix it apart from President Jokowi because there are many people involved, a lot involved," he said.
APSyFI recommends that improvements be made to the Customs system to truly address the problem of illegal imports. Without these improvements, the policy of increasing import duties will not be effective in protecting the domestic textile industry from the onslaught of cheap imported products.