Minister calls for rise in import duty on garments

Adianto P. Simamora, The Jakarta Post, Jakarta

Minister of Industry and Trade Rini M. Soewandi has asked the Ministry of Finance to raise the import duties on garments to help local producers sell more of their products in the domestic market.

Following the bomb attack in Bali, which killed more than 180 people, it is feared that many foreign buyers will shift their orders from Indonesia to other countries. This has made the domestic market crucial for the survival of the local garment industry, Rini said.

"I've sent a proposal to Pak Boediono asking him to raise the import duty on garments to up to 40 percent," Rini said after opening the 12th Export Forum on Thursday, referring to the minister of finance.

The import duties on garments now range from between 15 percent and 25 percent.

It is unclear if the new import duties would be applied to all garments or only to those imported from outside the Association of Southeast Asian Nations (ASEAN). Under the ASEAN free trade plan, or AFTA, Indonesia is required to cut import tariffs on textile products to below five percent by 2003.

The Indonesian Association of Textile Producers (API) earlier asked the government to delay the implementation of AFTA for textile products.

However, the majority of imported garments now available locally are made in China.

In addition to an import tariff increase, Rini has also asked the police to intensify operations to crack down on the smuggling of garments into the country, which she said was severely harming local producers.

"Many imported products pour into the local market without paying taxes, while our local industry has to pay taxes. So we must improve this situation," Rini said.

Unless the smuggling is stopped many local producers will go bankrupt in the near future, which will result in massive layoffs, Rini warned.

Concern over the smuggling of garments has also been raised by API.

Indonesia booked a record US$8.2 billion in exports of textiles and textile products in 2000, but exports slipped to $7.6 billion in 2001.