Entrepreneurs doubt that Indonesian textile exports to South Korea will increase after the trade agreement between the two countries, namely the Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA) officially takes effect on January 1, 2023. Secretary General of the Indonesian Filament Fiber and Yarn Association (APSyFI), Redma Gita Wirawasta, said that even though there is an ease of zero percent import duty, it is not certain that the trade agreement can boost textile export performance.
“First, Korea is not a major export destination and consumption is not too much. Korea also has its own style, they store a lot of their garments in Vietnam and Bangladesh. In Indonesia, there are but not many orders from there," said Redma, Wednesday (4/1/2023).
Redma said that the textile business between Korea and Indonesia is a substitute. Raw materials from Indonesia are sent to Korea to be processed into cloth or clothes. Then these textile products return to Indonesia to meet domestic demand and some are processed again for export.
Instead of increasing exports, Redma is actually worried that there will be a trade balance deficit between Indonesia and Korea with the applicable 0 percent import duty.
Based on data from the Central Statistics Agency (BPS) in 2021, the trade balance between Indonesia and South Korea is a deficit of US$445 million. According to him, it is possible that imported goods from South Korea will increasingly flood Indonesia.
For this reason, he hopes that tools in import regulation such as safeguards and limited bans or lartas must be effective in order to increase sales of Indonesian products.
"We have a safeguard, we have a background, the hope is that it will be effective in controlling imports. Don't let import permits be issued intermittently, we hope that the tools to regulate imports can be effective," he said.
Thus, Redma revealed that there was no significant impact from the IK-CEPA on textile exports. Especially in the current conditions, where the demand for textile products from the main export destination countries, America and Europe, is still not improving.
As previously reported, the Ministry of Trade (Ministry of Trade) said that through the IK-CEPA, South Korea provided convenience in terms of import duty rates in the form of eliminating 11,267 tariff items or 95.5 percent of the total tariff headings to 0 percent.
Likewise with 92 percent of Indonesia's tariff posts. Several Indonesian products whose market access will be increasingly open include bicycles, motorcycles, motor vehicle accessories, processed fish products, snake fruit, and textile products such as socks.
Meanwhile, Secretary General of the Indonesian Textile Association (API), Rizal Tanzil Rakhman, said that currently demand for exports from Korea is still maintained and there has not been a decline like that of America and Europe. Rizal still hopes that the implementation of the IK-CEPA trade agreement can produce results in the form of increasing textile exports to Ginseng Country.
"South Korea has good market potential. The existence of IK-CEPA will of course strengthen our market penetration there, hopefully in the textile sector the export performance will be even better," he said, Wednesday (4/1/2022).a
