One of the factors that contributed to the drop in utilization of the textile and textile products (TPT) industry was the flood of imported products. In fact, there is a textile industry that has been forced to close its operations due to bankruptcy. A number of TPT associations conveyed their stance statements to the Ministry of Industry.
In the last ten years, the domestic textile and textile product (TPT) industry has been hit by a number of imported TPT products. Illegal imports still threaten the domestic textile industry. The inflation of illegal products in the national textile market can reach up to 30 percent, some are completely smuggled products, some are “Spanish” or half are helpful.
One of the uncovered cases of illegal imports occurred in August 2020. The Attorney General's Office revealed that there were 566 containers containing textile materials in Batam. This case then declared Batam Customs and Excise officials and owners of PT Fleming Indo Batam (PT FIB) and PT Peter Garmindo Prima (PT PGP) as suspects.
The smuggling mode used in this case is to change the price in the invoice with a smaller value to reduce the safeguard or the burden of temporary security measures (BMTPS). State losses due to this case reached Rp1.6 trillion, as quoted from lokadata.id, on January 15.
As a result of this phenomenon, the textile industry has experienced a decline in utilization. One of the triggers is the flood of imported products. Secretary General of the Indonesian Fiber and Filament Producers Association (APSyFI) Redma Gita Wiraswata estimates that the penetration of smuggled textiles into the domestic market is around 30 percent of imported products.
Inevitably, several TPT companies went bankrupt, resulting in Termination of Employment (PHK). That is the condition of the textile industry lately.
Redma said, the domestic textile industry has not been able to fight against China as one of the world's largest textile producers. This is because the Chinese government provides exporters with a tax rebate or tax discount of around 15 percent. "And the exporters themselves also do dumping. "Approximately more than 50 countries have imposed trade remedies against China," he said.
Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia said three things were the cause of the closure of domestic textile factories. First, related to the textile industry labor wages are considered quite expensive so that it provides an operational burden for the company.
Second, the flood of imports of textile products into the country. The large number of imported textiles to Indonesia puts pressure on the national producers, especially because the prices are very cheap compared to domestic products.
According to him, currently on the market there are many products labeled as manufacture from other countries. Although he did not mention the data, Bahlil said this phenomenon had become an open secret among the public.
"Third, because it is our COGS (Cost of Goods Sold). The raw materials here are indeed expensive, because the machines are a bit old, so there must be rejuvenation, "he said.
This has prompted a number of textile industry entrepreneurs in West Java to plan to relocate their factories to Central and East Java, where work costs are considered to be lower. According to Bahlil, this wage issue will be coordinated with local governments to find a solution. "First, it is because of the workforce, the wages have started to rise," he said.
For these problems, a number of associations that overshadow the textile industry, namely the Indonesian Textile Association (API), the Association of Indonesian Fiber and Filament Yarn Producers (APSyFI) and the Indonesian Association of Textile Experts (IKATSI) told of a number of problems that continue to undermine the competitiveness of the textile industry to Minister of Industry Agus Gumiwang Kartasasmita.
"We have met with the Minister of Industry and delivered 9 statements of the attitude of the TPT entrepreneurs," said Secretary General of the Indonesian Association of Fiber and Filament Yarns (APSyFI) Redma Gita Wirawasta.
On this occasion, TPT entrepreneurs asked the government to evaluate every trade agreement made with other countries. This is because a number of agreements are considered to have been detrimental to the textile industry in the country. "We are not against a trade agreement, but it must be calculated carefully," he explained.
Apart from APSyFI, this request was also voiced by the Indonesian Textile Association (API) and the Indonesian Textile Expert Association (IKATSI).
In addition, entrepreneurs also asked the government to enforce the law on hundreds of companies holding fake importer-producer identification numbers (API-P) and violators of API-U (general-importer identification numbers) who have flooded the market with imported products. " it has damaged the national textile industry by thus hindering investment, "he stressed.
He said he encouraged the government to suppress imports of textile products through a number of policies. Among them are strengthening upstream and downstream integration in the textile industry through the use of domestic raw materials, as well as increasing the level of domestic content throughout the value chain to support the Ministry of Industry's target for 35% import substitution, as quoted from industry.co.id, last 1/15. .
"Relaxation is a bit strange. In terms of trade policy, it is the government that is given relaxation of imports. If the import relaxation is given, what will the producers do? At home, they are still fighting to get the domestic market, when exports are difficult, but the government actually gives relaxation to imports. We want the government to guarantee the domestic market for domestic products, ”said the Secretary General of the Indonesian Fiber and Filament Producers Association, Redma Gita Wirawasta.
Redma's annoyance cannot be separated from a number of policies to relax imports of raw materials that have been carried out in recent years, including the revision of the Regulation of the Minister of Trade (Permendag) No. 85 of 2015 to become Permendag No. 64 of 2017 and most recently the Minister of Trade Regulation no. 77 of 2019. For information, this policy was taken during the previous trade agreement.
He considered, with this policy, imported products have the potential to flood Indonesia. In fact, it is judged that domestic producers can still meet demand. "Okay, if the product has not been made, the government may give import relaxation, but I see that some products that we can produce are given import relaxation. This is a burden for us to compete in the midst of a pandemic with cheap imported goods, "said Redma.
Redma acknowledged that there is indeed support for the domestic industry from the government. But unfortunately it is not as pronounced today as the decline in gas prices, in fact it is not as beautiful on paper. "There is a minimum charge for consumption. Where now almost everything is below the minimum consumption because it is not fully utilized. This means that the price of gas is 6 dollars per mmbtu but it is subject to a penalty charge, but it is still subject to 9 dollars. Some companies whose utilization above have seen little benefit. I don't think anyone else (feels), "said Redma.
The following 9 statements of association's attitude were submitted to the Minister of Industry:
- In order to strengthen upstream and downstream integration in the textile industry through the use of domestic raw materials and increase the level of domestic content throughout the value chain to support the Ministry of Industry's target of 35% import substitution.
- Asking ministries and other government agencies to support the President's target and vision to reduce unnecessary imports and prioritize the use of raw materials and goods that are already produced domestically.
- So that the revised Regulation of the Minister of Trade No. 77 of 2019 concerning the Provisions for the Import of Textiles and Textile Products not to grant API-U permits, not to import textile products through Bonded Logistics Centers (PLB) and Bonded Warehouses.
- Legally processing hundreds of fake API-P companies and API-U offenders who have flooded the market with imported products that have damaged the national textile industry by thus hindering investment.
- Immediately implement safeguards in the garment sector with a sufficient amount of import duty to stem imports and restore injury-hit industrial conditions from a flood of imports.
- Encourage the imposition of further Trade Remedies to be submitted in 2021.
- Evaluating trade agreements that have been made can provide benefits to the manufacturing industry sector, especially the textile sector. The formation of trade agreements must be carried out carefully and have a significant impact on the economy with a larger trade balance surplus indicator.
- Regarding unprocedural imports through wholesale imports, under name, under invoice (price and volume), transshipment and HS flight, and requesting revamping and repair of the Directorate General of Customs and Excise, Ministry of Finance of the Republic of Indonesia As well as supporting the legal process for violations that are currently being investigated by the Attorney General's Office of the Republic of Indonesia (Batam and East Java cases), the ongoing legal process can be expanded to investigate companies that do the same thing because this mode is massive and carried out by hundreds of textile and logistics importing companies.
- In order to accommodate suggestions and input related to the draft Government Regulation on the Implementation of Law no. 11 of 2020 concerning Job Creation in the Industry and Trade Sector.