Players in the textile and textile products (TPT) industry, including the footwear sector, hope the government will provide relaxation in the form of a Value Added Tax (VAT) payment discount amid rising raw material prices due to global geopolitical tensions.
Redma Gita, Chairman of the Indonesian Filament Fiber and Yarn Producers Association, stated that raw material prices have currently increased by around 30% to 40%. This increase is also considered to increase the VAT payments industry players must bear.
According to him, this situation has led to a decrease in raw material purchases, which has resulted in a decrease in production. Therefore, industry players hope for VAT payment relief to alleviate pressure on companies' cash flows.
Redma explained that pressure on companies' cash flows needs to be reduced so that the industry can retain its workforce and avoid layoffs. He believes the proposed VAT discount will not harm the government because tax revenues will continue to flow, while the industry can continue production without reducing the number of employees.
Meanwhile, Anne Patricia Sutanto, Chairwoman of the Indonesian Garment and Textile Association, stated that she welcomed the positive proposal as long as it did not negatively impact other parties and increased public purchasing power.
According to Sutanto, increased purchasing power would also stimulate the national economy, including for domestic producers. However, she emphasized that the VAT discount policy still needed to consider the government's overall fiscal situation to avoid a negative impact on state revenues.