JAKARTA - The Indonesian Filament Yarn and Fiber Association (APSyFI) assesses that the implementation of a carbon tax will reduce competitiveness in the domestic and export markets. APSyFI Secretary General Redma Gita Wirawasta said that in the textile and textile product (TPT) industry, energy costs ranged from 10-25 percent of the total production cost. Redma also said that the energy mix in the textile sector to date is entirely based on fossils.
"It will definitely affect the selling price and export competitiveness. We still can't calculate the percentage," he said, Thursday (14/10/2021).

In addition, the carbon tax is also considered to lack the investment flow that is needed by the industry to switch to renewable energy. Redma said that five years ago, he had put forward a proposal to provide incentives for industries that could reduce their emissions. This is considered to open the investment tap to expand the use of green energy in the industrial sector.

If the incentive policy cannot be implemented, he continued, the government could implement a gradual system of carbon taxation.
"For example, the government's target is to decrease by 25 percent from the baseline. If there are companies that are still above that, new emissions will be taxed. For the tax year, increase it again [the baseline], and so on," explained Redma.
The carbon tax is set by the government in the Law on the Harmonization of Tax Regulations (HPP). The amount decreased from the previous proposal, which was Rp75 per kg CO2e to Rp30 per kg CO2e.
In accordance with article 17 paragraph 3 of the HPP Law, the first to be subject to a carbon tax is the agency engaged in coal-fired power plants (PLTU) from April 1, 2022 to 2024. From 2025 onwards, the implementation of the carbon tax will expand to the following sectors: other industrial sectors pay attention to readiness and factors such as economic conditions, readiness of actors, as well as impact and scale.