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The implementation of the carbon tax in 2022 is considered to be burdensome for the business continuity of the Indonesian textile and textile product (TPT) industry. For information, the government will impose a carbon tax on April 1, 2022 in the Draft Law on the Harmonization of Tax Regulations (RUU HPP). This tax levy is imposed on entities operating in the field of coal-fired power plants (PLTU) at a rate of Rp. 30 per kilogram of carbon dioxide equivalent (CO2e) or equivalent units. Ian Syarif, Deputy Chairperson of the Indonesian Textile Association (API) said that the textile industry was clearly affected by the carbon tax regulation.

 

Moreover, the textile industry is a user of coal without a carbon tax which has been pressured by the trend of rising commodity prices. As a result, the selling price of downstream products such as garments also increases.

API estimates the effect of the imposition of a carbon tax on the production costs of the textile industry from upstream to downstream.

If the finished carbon tax is realized, the production cost of the fiber industry can increase by 2%, then the spinning industry will increase by 1%, the knitting and weaving industry will increase by 1%, the dyeing and finishing industry will increase by 5%, and the garment industry will increase by 0.25%.

In accumulation, the increase in production costs in the textile industry due to the carbon tax reached 9.25%. "The association hopes that market access will be given so that the industry can absorb this cost increase," added Ian, Wednesday (11/10).

On the other hand, with the plan to implement a carbon tax, the local textile industry will inevitably have to modernize and switch to more environmentally friendly technologies. This is in order to survive in the era of carbon tax policies as well as mitigate climate change.