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Stake Holder : Textile Industry Needs Fundamental Changes

The apparent growth of the textile industry and textile products (TPT) sector is a challenge for the Trade Minister Muhammad Lutfi to solve the problem. The import-driven growth of the textile industry has resulted in hundreds of factories out of business in the last 3 years. The high growth in textile imports as a result of trade policies that are considered pro-import also results in low investment.

The Secretary General of the Indonesian Fiber and Filament Yarn Producers Association (APSyFI) said that the investment share in growth continued to decline to only 2.1% in 2019. "The import relaxation policies through PERMENDAG 64 2017 and PERMENDAG 77 2019 which are predicted to encourage exports have failed completely, because exports even fell to USD 12.8 billion, "he explained.

President Jokowi's challenge is to reduce imports and Mrs. Sri Mulyani to revise the rules for the import trade system at the November 2019 meeting at the palace as a legal umbrella for general importers through the Bonded Logistics Centre (PLB) and Bonded Warehouse (GB) facilities as the main entry points for the flood of textile imports. can be answered by the Ministry of Trade to this day. "The homework has not been completed for 1 year because importers still have interests in lobbying the line ministries, this is actually the PR Minister Lutfi" he said.

Then Redma warned that another challenge in revising the Code of Commerce came from Customs, which still wanted to provide textile import facilities through PLB and GB in the revised PERMENDAG 77 2019. "It's actually a bit strange if Directorate General of Custom (BC) as an operator insists on the level of trade and industrial policies, because of supply-demand and data on the ability of industry to fulfil domestic raw materials are the technical ministries, not BC" explained Redma. "The existence of outside interests is also a challenge for Trade Minister Lutfi in an effort to reduce imports," he added.

Another challenge is the implementation of garment safeguards which are currently in the final process following the textile safeguards that have been implemented previously. Chairman of the Organization of the West Java API, Kevin Hartarto, stated that the status of the national textile industry net exporter could change to a net importer next year if the safeguard is not implemented immediately. "Because the data shows a significant trend of increasing garment imports during 2017-2019," he said.

Kevin explained that half of the tariff posts for garment products show a significant trend of increasing import volume in the last 3 years. "There is even one garment tariff post whose import volume is up to 200% higher than last year," he said.

According to him, the increasing number of domestic garment imports is due to Chinese garment manufacturers contributing around 25% of the total global garment demand, while Indonesia is only 1.7%. In addition, the Indonesian government has signed a free trade agreement (FTA) with China so that the import duty for Chinese garments will be 0% plus RCEP or ASEAN + 5 which liberalizes our TPT tariffs for 11 neighbouring countries.

Kevin assessed that the implementation of safeguards is very necessary to save IKM and UMKM because most of the garment production actors are IKM and UMKM. "Implementation of safeguards in addition to reducing imports and saving foreign exchange, what is more important is to re-stimulate the creation of many small and medium garment industry players (IKM) and absorb labor," he explained.

In line with API and APSyFI, Executive Director of the Indonesian Textile Expert Association (IKATSI), Riza Muhidin said that currently the government is too facilitating imports compared to domestic products. "To encourage exports, there are already Bonded Zone (KB) facilities and Ease of Import for Export Purposes (KITE), no longer need PLB and GB, this is too much so that imported goods flood the domestic market, while facilities for local raw materials simply don't exist" said Riza.

Riza suggested that the Ministry of Trade join hands with the Ministry of Industry to jointly control textile imports. "The target of the Ministry of Industry for import substitution of up to 35% is in line with President Jokowi's direction, so that it can be in line with the Ministry of Trade if the Minister really wants to reduce imports," explained Riza. "You do this by revising the rules of trading system and implementing safeguards, which will be heard by input from producers, not from importers and their cronies," he added.

IKATSI is surprised that there are still officials and agencies such as BC who insist on continuing to provide import facilities. "If the reason is that the raw materials for domestic IKM are able to supply them, and that is the authority of the Ministry of Industry to regulate the supply-demand," he concluded. **