Business actors and the textile industry in West Java (Jabar) are threatened with stopping production. The continuity of their business is threatened due to predatory pricing practices or selling goods below the price of raw materials on social commerce platforms. The Ministry of Cooperatives and SMEs (Kemenkop) stated that the practice of predatory pricing is actually starting to be felt by textile business actors with the decline in demand. Their turnover falls, production decreases, and this could even result in layoffs.
In Majalaya District, Bandung Regency, West Java, for example, since Eid until now, production has continued to decline until several factories are no longer able to continue producing. In fact, in areas where many residents are involved in the textile business, production activities are usually busy every day.
During his visit to several textile factories in Majalaya, Minister of Cooperatives and SMEs Teten Masduki witnessed firsthand the current conditions of the factories and received complaints from several textile SMEs in Bandung Regency. "Indeed, there has been a quite drastic decline because MSMEs who produce Muslim clothing, headscarves, ready-made clothing which are sold in wholesale markets, such as Tanah Abang, ITC Kebon Kelapa, Andir Market have seen a decline," said Teten in an official statement, Monday (25/9 /2023).
As a result, he said, demand for clothing, fabrics and textiles has decreased drastically. During his visit to several textile factories, he took part in discussions with textile business actors in Majalaya.
During the discussion, a number of textile business actors were present, including the Indonesian Textile Association (API), the Bandung Convection Entrepreneurs Association (IPKB), the Majalaya Textile Association, and the Bandung Regency KADIN. Teten emphasized that their products were unable to compete not because of quality, but because of the price which was not included in the cost of goods sold (HPP) for textile SMEs/IKMs who were unable to compete.
"I received information that there are indications of widespread uncontrolled imports of ready-made clothing and textile products. These low prices are predatory pricing on online platforms, hitting offline traders and the convection production sector as well as the textile industry being flooded with very cheap products from outside," he said.
According to him, this happened because it was encouraged by the safe guard regulations which did not work properly. So, he said, the government is trying to improve and coordinate with the Minister of State for future steps.
"Because, once again, this authority lies with the Ministry of Trade (Kemendag) and the Ministry of Finance (Kemenkeu). President Jokowi has also said that as soon as possible there will be a law that regulates it," he said.
Teten emphasized that President Joko Widodo had said he would review online trading. This is also included in the revised regulations of Minister of Trade Regulation Number 50 of 2020.
The Minister of Cooperatives also feels that there is a need for special HPP for textile products. "Because in China itself, they apply a model that goods entering there cannot be under HPP. If implemented, it can protect domestic industry."
API General Chair Jemmy Kartiwa Sastraatmaja said that currently global trade is not doing well. China, which is the world's largest producer or manufacturer, has many of its goods that are not absorbed by large countries, such as the United States (US) and the European Union, so they are trying to find new markets where trade barriers are weak.
"Don't let Indonesia just be used as a market, because Indonesia is the country with the fourth largest population in the world. Our GDP is still better and Indonesia's inflation is quite controlled compared to other countries," he said.
According to him, it is not surprising that Indonesia is targeted to become one of the market shares. If you are not smart about installing trade barriers, he said, this ecosystem will be destroyed and have an impact upstream.
General Chair of the Indonesian Convection Entrepreneurs Association, Nandi Herdiaman, added that the attack on imports whose prices were below market had driven low demand, including what occurred in Tanah Abang, Central Jakarta. "The impact is a decrease in production, not just in one or two factories, but even in thousands. Plus the impact of unemployment is even up to millions," he said.
