Analyst: US Zero Per Cent Tariff to Benefit Indonesia's Textile Industry
Jakarta (ANTARA) - Executive Director of the Center of Reform on Economics (CORE) Indonesia, Mohammad Faisal, has assessed that the zero per cent tariff granted by the United States on Indonesian textile and garment products will greatly benefit the country’s export-oriented textile industry.
“The textile industry oriented towards exports to America will certainly benefit. Our export market share to the United States is more than 60 per cent, so conditions will improve with the zero tariff,” Faisal said when contacted in Jakarta on Friday.
He explained that approximately half of national textile production is destined for export, with the majority heading to the US market. He therefore considers this policy will directly strengthen the competitiveness of Indonesian products in the global market.
However, Faisal emphasised that the benefits would only be felt by businesses reliant on sales to the US.
“For those not exporting to America, nothing changes. What would help them is a policy to control imported products from China,” he said.
According to Faisal, the surge of cheap clothing imports from China in 2025 has depressed the domestic market and driven a number of factories to carry out mass layoffs.
“Many factories have closed because the domestic market has been eroded by far cheaper imports, particularly from China,” he explained.
Faisal added that the flood of Chinese textile products into Indonesia is also a knock-on effect of the tariff policies imposed by US President Donald Trump on Chinese goods.
“Chinese products that cannot enter the American market will naturally seek routes to other countries. Indonesia has become one of the easiest markets to penetrate because its trade barriers are relatively limited,” he said.
Given these conditions, Faisal believes import control policies are key to sustaining the domestically oriented textile industry, whilst the zero tariff in the United States will provide a welcome boost for exporters.
The Indonesian and US governments have agreed to eliminate import duties to zero per cent for Indonesian textile and garment products through a specific quota scheme. The agreement was signed on Thursday (19 February) Washington time through a Tariff Rate Quota (TRQ) mechanism.
The scheme allows a specified volume of textile and garment imports from Indonesia to enter the US at zero per cent tariff, with quotas determined based on the volume of textile raw materials imported by Indonesia from the US, such as cotton and synthetic fibres.
Coordinating Minister for Economic Affairs Airlangga Hartarto previously stated that this policy would benefit millions of workers.
“This certainly provides benefits for four million workers in this sector, and if we include their families, it significantly affects 20 million Indonesians,” he said during a virtual press conference in Jakarta on Friday.
Beyond textiles and garments, there are 1,819 tariff lines for Indonesian products now receiving duty-free access at zero per cent, covering palm oil, coffee, cocoa, spices, rubber, electronic components including semiconductors, and aircraft components.