Jakarta. Many domestic producers of food, beverages and cosmetics have been battered by the Asean-China Trade Agreement and are choosing to import products and sell them rather than produce them, the Indonesian Employers’ Association (Apindo) says.
Association chairman Sofyan Wanandi said on Monday a flood of cheap imported products and rising manufacturing costs, especially for electricity, had hurt manufacturers.
An influx of illegal imports - including those not approved by the Food and Drug Monitoring Agency (BPOM) - had also hit Indonesian companies.
According to the Trade Ministry, food and drink products costing $130 million had been imported in the first half of the year, compared with $171 million for all of last year.
Sribugo Suratmo, head of the Bread, Cookie and Instant Noodles Association (Arobim), said the domestic bread and biscuits sector has seen a decline in production of up to 25 percent.
Putri Kuswisnuwardhani, head of the Indonesian Cosmetics Association (Ppaki), said production had stagnated in the first half of the year after growing about 11 percent during the same period last year.
Sofyan said the influx of illegal imports had only made it more difficult for local producers.
“I am not sure whether the domestic industry can compete with foreign items,” he said.
“The illegal imported products can easily enter the local market, while the country’s own producers find it harder to create certain items because they have to meet high standards from the Food and Drug Monitoring Agency.”
Sofyan was unable to estimate the total amount of illegal products entering the country, or their share of their respective domestic markets, but said raids in Yogyakarta, Pontianak, Malang and Banten had uncovered illegal products including bread and biscuits, candies and slimming pills.
However, he said that many of the illegal products had been approved by BPOM but violated a regulation requiring that their ingredients be listed in Indonesian.
Putri said production of herbal and natural cosmetics had slumped 20 percent during the first quarter of the year.
“Illegal herbal products now have between 30 percent and 40 percent of the national market,” she said.
Most of the illegal products come from China, Thailand and Vietnam.
Sribugo also complained about what he said were BPOM’s complicated approval procedures.
“Registering at the agency may take up two years,” he said.
Sribugo added his association would calculate the total loss of sales as a result of such hindrances by the end of the year.
Chris Kanter, vice president of the Indonesian Chamber and Commerce and Industry (Kadin), said he was urging the government to strictly require all imported products to translate their ingredients into Indonesian as stipulated in a new Trade Ministry regulation to take effect on Sept. 1.
The new regulation will strengthen the old one.
“The government should make it difficult for foreign products to enter the national market,” Chris said.