The Covid-19 pandemic that has hit almost all countries in the world, including Indonesia, has yet to end. This pandemic not only causes health problems, but also triggers an economic recession in all aspects of life.
Various industrial sectors are unable to carry out normal activities. Likewise, the fate of the textile industry is still shadowed by uncertainty amid fears that consumer purchasing power has not yet recovered and the threat of imported products that will erode the share of domestic products. Not to mention that the export of textile goods is still limited in order because the Covid-19 situation in several destinations has not improved.
Based on BPS data, until the first quarter of 2021, public consumption is still falling or at minus 2.23 percent on an annual basis. This decline in consumption is predicted to continue until mid-2021 due to the difficulty of suppressing unemployment, where the Open Unemployment Rate in February 2021 was recorded at a high enough rate of 6.26.
In the first quarter of 2021, the Indonesian economy experienced a growth contraction of 0.74 percent, the processing industry was also recorded to still have a red report card or minus 1.38 percent, although on a quarterly basis, this figure has shown improvement from the fourth quarter of 2020 which was minus 3.14 percent.
The economic contraction in the Manufacturing Industry category in the first quarter of 2021 occurred, among others, in the Textile and Apparel Industry, which experienced a growth contraction of 13.28 percent on an annual basis, because domestic and export demand had not improved. The problem has not been resolved, this industry still has to be suppressed by the onslaught of imported garments that are increasingly flooding the market.
Import Issues
The invasion of imported apparel products threatens the domestic textile and textile products (TPT) industry, because it will make it difficult for the marketing of domestic products. The current import of textile products from China and ASEAN countries can be carried out without import duties. This is a bad sentiment for investment and has an impact on the trade balance, which indirectly has the potential to weaken consumption. If that happens, the economic recovery from the effects of the pandemic will be slower.
The absence of additional import duties for garment products will significantly put more pressure on the domestic textile producing industry, especially for small and medium enterprises (IKM). The share that domestic products should be able to fill is getting narrower because they have to compete directly with cheaper similar products. The absence of security measures has also resulted in the upstream industry's upstream industry's absorption of raw materials not optimal
Meanwhile, the textile industry in Indonesia involves a very large workforce, so there is a need for partisanship from the Government in terms of regulations. The government needs to provide protection for the domestic market from excessive imports. According to BPS data, in 2020 textile exports were worth US $ 10.55 billion, while imports were valued at US $ 7.20 billion. Despite the surplus, the composition of the textile import and export in 2020 is mostly dominated by apparel, compared to yarn, fiber and other textile raw materials.
Recovery
The profile of the domestic textile industry consists of two categories, namely large industries with export market orientation and the majority of which are in bonded zones. Then the majority of filling textiles for the domestic community are Small and Medium Industries (IKM). The domestic market is a portion of the market for IKM. To increase the competitiveness of IKM in dealing with imported goods in the domestic market, innovation is needed to empower IKM, so that it is more accessible to the public as well as administrative order and tax compliance through the IKM digitization system. In this case, the government has a policy role and responsibility to empower the community's economy, facilitate the provision of controlled working capital, and increase compliance with taxation.
The government should apply a harmonized tariff structure from upstream to downstream for the textile and textile product industries. Ideally, downstream product import tariffs should be greater than the import tariff for upstream products.
However, the reality is that currently related to the imposition of raw materials, import duty is imposed, while for imported textile finished goods the same thing is not applied. If the government cannot protect the domestic market, these IKM will slowly die. Even though the textile industry's potential can grow the Indonesian economy in the midst of a pandemic.
The government must immediately make a policy in the textile industry so that the domestic market is protected. For example, with the imposition of tariffs for certain apparel commodities, so that the prices of imported products are not too cheap, so that consumers can switch to domestic products.
The key to the recovery of the textile industry depends on the readiness of the market for available products. Apart from that, people's purchasing power is also a driving factor for the rise of the domestic textile market.
The right trade policy will have a huge impact on the absorption of national labor. This is especially so when the economy is recovering, which requires a lot of work to accommodate the millions of workers who are victims of the pandemic. If it is difficult to create employment opportunities, it will also be difficult for the process of economic recovery. This is because the textile industry is a labor-intensive industry that can actually be a means of preventing unemployment from rising.
Hopefully, economic activity can increase as the vaccination program progresses. With this vaccination we hope that economic movements, community movements and movement of goods will no longer be limited. So that the economic recovery, especially in the textile industry, can be achieved more quickly.