Chinese textiles flood local market
Chinese textiles flood local market
The Jakarta Post, Jakarta
After eight years in the garment industry, Supena is savvy enough
to know that one must keep abreast of the latest trends to stay
in business. That includes the use of imported textiles,
regardless of the legality of the practice.
"We are now using fabrics from China," said Supena, whose
factory in the West Java town of Tasikmalaya employs 200 people.
"Otherwise, we would have to close shop."
Although he suspected the polyester he purchased from a broker
was smuggled into the country, the savings was too great for him
to ignore: Rp 2,300 (24 US cents) per meter for the Chinese
polyester compared to Rp 7,000 per meter for Indonesian-made
polyester.
As more local garment businesspeople switch to imported
products, mainly from China and South Korea, local textile
manufacturers are growing concerned.
"About 60 percent to 70 percent of textile products in the
domestic markets are imported, legally or illegally," said
Herris, the head of the wholesale division at the Jakarta branch
of the Indonesian Textile Association (API). "If this continues,
a lot of factories will have to close down."
He said the association arrived at its figure of imported
textile products after conducting surveys at textile markets
throughout the country -- Tanah Abang and Cipulir in Jakarta;
Bukit Tinggi in West Sumatra; Medan in North Sumatra; and Bandung
in West Java.
According to Herris, a significant number of the imported
textiles were illegally smuggled into the country through various
ports.
"Buyers used to come to Tanah Abang to buy textiles and
garments," said Herris, referring to the largest textile market
in Southeast Asia, which has a daily turnover of Rp 150 billion.
"Now it is the other way around. Tanah Abang vendors are going
to places like Bukit Tinggi because that is where the cheap
imported goods are.
"Customs and excise officials are not doing their jobs or are
pretending that nothing is happening," he said.
Imported textile products are assessed a customs tax of up to
15 percent and a mandatory value added tax of 10 percent.
API chairman Benny Soetrisno said the flood of imports was
worrying.
"The domestic textile market has been disrupted by the
smuggled products," he said, adding that the government would
lose potential tax revenue if it continued to ignore the problem.
Economist Aviliani from Jakarta-based Paramadina University
said the increase in smuggled textiles was cause for concern.
"People who used to be manufacturers are now turning into
traders," she said, adding that if this trend continued the
estimated 1.2 million textile workers in the country would begin
to lose their jobs.
However, she said the more fundamental issue was the textile
industry's lack of competitiveness and productivity compared to
China.
"The cost of the bureaucracy here is high," she said. "Also,
the minimum wage makes the industry inefficient.
Aviliani's opinion is shared by the API's head of human
resources, Indra Ibrahim.
"It is pointless to be jealous of China's ability to produce
cheaper products. It is more important that we improve our own
competitiveness," he said, adding that Chinese textile workers
were about 50 percent more productive than Indonesians.