Minister issues decree to limit textile imports

Adianto P. Simamora, The Jakarta Post, Jakarta

The Ministry of Industry and Trade has issued a decree to limit textile imports in a bid to help the local industry, which has been severely hurt by massive quantities of cheap imports.

Decree No. 732/2002, which was signed by minister Rini MS Soewandi on Tuesday, stipulates that the importation of textile products can only be done by local textile producers.

Textile imports can only be used as raw material or supplements for the production process of the importers-producers and may not be sold or transferred to others, the decree states.

The decree says that the new regulation was necessary "to prevent the sale of illegally imported textiles, which has created unfair trading and inflicted losses on local textile producers."

The decree came following repeated complaints by local producers over the massive quantity of cheap imported textiles, mostly from China, available on the local market.

They said that uncontrolled textile imports had added to the misery of local textile producers, which have been struggling to cope with rising manufacturing costs.

The decree also states that all authorized importers must seek approval from the ministry for the amount and the time schedule of their imports.

Importers must also report to the ministry about the realization of their monthly imports.

The government will revoke their import licenses if authorized importers fail to submit monthly reports, according to the decree.

The Indonesian Textile Association (API) chairman, Lili Asdjudiredja, welcomed the decree, saying it could help curb the smuggling of textile products and protect local producers against smuggled imported products.

"This is very good news for us. Our local products have been seriously threatened by smuggling activities. With the new decree we can now control the inflow of textiles into the local market," Lili said.

Indonesia booked a record textile export value of US$8.2 billion in 2000, but the export value slipped to $7.6 billion last year.

There are also fears that many foreign buyers will be reluctant to buy Indonesian textiles, and shift orders to other countries, if they are dissatisfied with the probe by Indonesia into the bomb attack in Bali more than two weeks ago.

In light of the fears, several days after the Bali bombing, Rini made an official request for the Ministry of Finance to raise import duties on garments to up to 40 percent to limit imports so that local producers had a better opportunity to sell their products on the local market.

Import duties on garments currently range from between 15 percent to 25 percent,

Rini has also asked the police to intensify operations to crack down on the rampant smuggling of garments into the country.