The increase in Value Added Tax (VAT) to 11 percent starting this month will first have an impact on textile entrepreneurs in the downstream sector. It is suspected that this will directly affect prices at the retail sales level. General Chairperson of the Indonesian Filament Yarn and Fiber Association (APSyFI) Redma Gita Wirawasta said that in the upstream sector, raw materials for this year's Lebaran season have been shipped since February so they are still subject to 10 percent VAT. "The manufacture of fiber and yarn has started since February, so there is no increase in VAT. We [businesses upstream] are also affected, but the impact is after Lebaran," said Redma

Although the increase in VAT to 11 percent is projected to increase inflation, Redma said that the investment plan in the textile industry this year will continue.

Redma said there would be a slight disruption to demand due to inflation. However, with the relatively abolished community restrictions, as well as the opening of this year's homecoming, demand will remain strong.

Meanwhile, what is still a concern for industrialists is the entry of imported goods ahead of the peak market for Eid. Redma said that although the current lockdown is widespread in China, imported goods sent in the previous months still have the chance to enter the domestic market.

"Even though there is no inflation, purchasing power is good, but once imports are opened, this becomes a problem. But if purchasing power is a bit slow due to inflation, but imports are not opened, we still have a market, that keeps investment on track," explained Redma.

He also hopes that there will be operations and supervision carried out by the government in the market as the last line of defense against imported goods, especially illegal ones.

"There are still remnants of imports that came here about two weeks to a month ago, the target is for Lebaran. This is what we ask to clean up at sales," he said.