Minister calls for rise in import duty on garments

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.