Flood of Imported Goods Causes 60% of IPKB Member Textile Industries to Close Business

TEMPO.CO, Jakarta - The Working Convection Entrepreneurs Association (IPKB) stated that 60 percent of its members in the textile and textile products (TPT) industry are no longer in operation. The association said that the wave of bankruptcies among small and medium textile industries (IKM) was caused by a flood of textile imports over the past two years.

"Our domestic market, both offline and online, is being swept away by imported products with unreasonable prices," IPKB chairman Nandi Herdiaman said in a written statement on Thursday, June 20.

Nandi suspects that the imported goods were imported illegally because they were marketed at extremely low prices, even below the price of the raw materials. Official imports of garments, he said, would include value-added tax (VAT), import duties and protective tariffs. "So it would be impossible to sell at less than Rp50,000 per item."

These extremely low prices, he said, make it difficult for local industries—both small and large—to compete with imported goods. Nandi said he's not surprised that many small and large companies, from upstream to downstream, have cut jobs or even closed their factories.

He hopes that SME textile entrepreneurs will be able to gain more ground in their own domestic market. Nandi believes that purchasing power in Indonesia is still quite high, especially with inflation still relatively low compared to other countries.

"I am sure that if the domestic market is well protected, at least 70 percent of the market is controlled by the local market, and Indonesian SMEs will develop," he said.

Import policies and regulations

Meanwhile, the executive director of the Indonesian Textile Association (API) Danang Girindrawardana said that the many closures of the domestic textile and textile products (TPT) industry, which resulted in mass layoffs, were not only caused by the Minister of Trade's regulation on import policy and regulation.

Danang said that a wave of imports of textile goods and ready-made garments had been occurring for a number of years. The peak was in 2023, with imported textile goods, both legal and illegal, piling up and saturating the Indonesian domestic market.

Markets in Indonesia are trying to market the remaining imported goods. However, as people's purchasing power is still relatively low, Danang said, imported goods are still piling up unsold.

"Our domestic market is saturated with imported products, and this has been happening for years," he told Tempo when contacted by phone on Friday, June 14, 2024.

HAN REVANDA PUTRA

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