The share of domestic textile producers in the national market is going to plunge to 50 percent by the year-end, down from 65 percent last year, as a wave of cheap imports to hits the domestic market, an association says.
Ade Sudrajat, deputy chairman of the Indonesian Textile Association (API), said on Wednesday the dramatic drop in market share retained by RI firms was the result of a big jump in imported textile products flooding the market.
“That may cause domestic products to eventually control less than 50 percent of the national market share by the end of this year,” he told The Jakarta Post on the sidelines of a national textile conference.
Ade said the domestic market is now estimated to be worth Rp 70 trillion (about US$7.42 billion) by the end of this year.
“[This is because] the Trade Ministry has given too many import licenses to those [who claim to be] importers/producers, without verifications in the field,” he said, hinting that many of these textile imports might have been entering the country illegally.
Ade said a number of API members had complained about imported textiles flooding the domestic market, and found many of the importers were not just producers, but actually traders and brokers.
“When we investigated it, we found that the importers were actually traders, not producers.”
His remarks should corroborate speculation that many of the imported textile products sold here were illegal imports, as textile imports in the first quarter of the year were actually [technically] 14 percent down from a year earlier and 15 percent from a quarter earlier. So official imports were declining.
The latest government data processed by the textile research centre Indotextile shows that textile imports were valued US$1.05 billion in the first quarter of 2009, from $1.22 billion in the same period a year earlier and $1.23 billion in the last quarter of 2008. .
In addition to illegal imports, the influx of textile imports have also been encouraged by low import duties imposed on Chinese, Japanese, and Korean products, according to Ade.
He said import duties on Chinese textiles averaged 5 percent because of part implementation of the
Association of Southeast Asian Nations-China free trade agreement (AC-FTA).
With Japan, he added, almost all of Indonesian textile tariff lines, particularly the sophisticated ones, were already zero because of the Indonesia-Japan Economic Partnership Agreement (IJ-EPA).
Despite API’s suspicions on the explanations for the big jump in imports, the government already has two regulations controlling textile imports: a 2008 Trade Ministry regulation on imports of particular products, which regulates imports of garments; and a 2009 Trade Ministry regulation on imports of textiles, which regulates imports of upstream textile products.
Trade Ministry director general for international trade Diah Maulida said that her ministry issued import licenses to importers/producers based on recommendations and verifications provided by the Industry Ministry.
Industry Ministry director general for metal, machinery, textile and miscellaneous industries Ansari Bukhari said the two sets of regulations covering importation of textiles both required verification by state surveying firm PT Sucofindo upon issuance of import licenses.
“I think that [the implementation of the two policies] is already optimized. We need to find the dominant factor that has caused high textile imports lately,” he told the Post.
Industry Ministry director for textile industry Arryanto Sagala confirmed that “there are such indications” as mentioned by API.
“We’re investigating this,” he told the Post.