Govt revamps textile quota distribution system
JAKARTA (JP): The government has issued new rulings on the distribution of textile and textile-related export quotas in an effort to eliminate collusion in the system.
The new decree, signed by industry and trade minister Rahardi Ramelan on Aug. 4, aims to improve the previous quota distribution system, which failed to prevent rampant practices of illegal quota trading in the country.
"The decree will optimize the distribution of textile quotas (to exporters) to increase foreign revenue, to give business certainty for textile producers and to provide more opportunities to smaller companies, cooperatives and newly operating companies," the minister said in a statement issued yesterday.
The Ministry of Industry and Trade allocates export quotas to textile producer-exporters, through which the producers can export their products to countries with set quotas.
The ministry is now less tolerant of textile companies that do not utilize large portions of their allocated export quotas.
It now imposes sanctions on quota recipients which trade, swap, shift or did not use over 10 percent of their allocated quotas the previous year.
The ministry gives fixed quotas to registered export-oriented firms based on their utilization of the quotas over the previous year.
Companies found to be underutilizing their quotas will lose their right to obtain other quota categories the following year, including flexible quotas and special shift quotas.
Flexible quotas are unused quotas allocated the previous year that can be carried over to the next year, while special shift quotas are those received under a special intercompany swap agreement.
Under the new decree, the ministry will allocate new fixed yearly quotas on Dec. 24 and in the third week of January.
This is to provide time for quota recipients to assure their buyers that they will be able to supply their orders over the upcoming year, and so they can begin shipping products by Jan. 1.
The ministry allocated quotas in January in the previous system.
About 60 percent of textile and textile-related exports are made under quota schemes. But many companies entitled to quotas have been known to trade their quotas for higher prices.
The ministry said it would now allocate its fixed quotas to producers based on data provided to them by state auditing company PT Sucofindo.
It will only allocate flexible quotas to producers which can submit the names and addresses of at least two buyers to ensure that the quotas will be used for exports.
The flexible quotas will be allocated in March, May and August.
The ministry said it would also allocate 60 percent of its flexible quotas to small companies and cooperatives, and would give the remaining 40 percent to middle- and large-scale companies.
In the past, the ministry has been criticized for prioritizing larger companies.
Ministry data shows that textile and textile-related exports rose 50.8 percent in the January to April period this year to US$2.46 billion from $1.63 billion the same period last year.
It said Indonesia utilized 63.79 percent of its fixed quotas last year for 14 top categories of textile products.
Indonesia ranked first in the utilization of quotas in the 14 top categories among 10 other competing countries: China, Hong Kong, Bangladesh, India, Pakistan, Malaysia, Singapore, Thailand, Sri Lanka and the Philippines. (das)