API demands policy to discourage importers
Anissa S. Febrina, The Jakarta Post, Jakarta
Arguing that imports of garments from China have soared significantly, the Indonesian Textile Association (API) insists that safeguard measures are needed to save the domestic industry.
“Data from the Central Statistics Agency (BPS) shows imports are soaring, especially garments. Requesting a safeguard is reasonable,” API secretary general Ernovian G. Ismy said last week.
Industry Minister Fahmi Idris had previously said textile and garment imports from China had risen by an average of less than 40 percent in the last three years, suggesting that safeguard measures were not necessary.
Ernovian said that the data cited by the minister could be an average figure on general textile imports.
Data from the BPS processed by the association showed that volume of garment imports from China in 2005 was 20 times higher than in 2004.
The highest increases were found in imports of coats, underwear, suits, blouses and handkerchiefs.
API will submit documentation for an official appeal to the Trade Ministry’s safeguard committee this Tuesday. The committee will verify the data before passing the appeal to the World Trade Organization.
Safeguard measures, which in broad terms take the form of a suspension of concessions or obligations, can consist of quantitative import restrictions or of duty increases to higher than bound rates.
“We will request premium import duties as well as a quota,” Ernovian said, adding that if the request was granted average import duties for garment products would rise from the current 15 percent to around 47 percent.
“With that kind of duty, domestic products can compete with Chinese ones,” he said.
Chinese products started to flood the Indonesian domestic garment market in 2004. With the massive production scale that Chinese companies had, the prices of their products could be far lower than Indonesian ones, he explained.
Trade Minister Mari E. Pangestu said that imposing safeguard measures on Chinese products would not solve the problems faced by the country’s ailing textile and garment industry and instead could lead to more illegal imports.
“However, we are still considering the request,” she said, adding that Indonesia might use a government-to-government approach on the matter, including suggesting China invests in the country.
Investment, both the government and the private sector agree, is the key to revitalizing the country’s ailing textile industry whose aging machinery has caused low competitiveness.
Discussions of possible loans from local banks ended with no result, with no indication of financial support available for textile companies, Ernovian said.
API has also proposed loans in the form of new machinery to several Japanese banks, but has not been met with any confirmation.
“Japan has not made clear what amount it can provide since there has not been any guarantee from the government,” Ernovian said.
