Irvan Tisnabudi

A worker sewing clothes at a garment shop in Jakarta. Domestic textile producers say they are losing market share every day while various ministries bicker about how to stop illegal imports. (Photo: Safir Makki, JG)

Textile Makers Say Illegal Imports Pose Major Threat

Rather than taking concrete action to stem the flood of illegal textile imports, officials from the Industry and Trade Ministries appear content to play the blame game despite repeated warnings that domestic producers are losing market share.

Ernovian Ismy, executive secretary of the Indonesian Textile Association (API), told the Jakarta Globe last week that local producers may end up with less than half of the domestic market by the end of the year if illegal textile imports continued. Currently, domestic firms have a 67 percent market share, he said.

He urged the Trade and Industry Ministries to stamp out illegal imports and to enlist the help of domestic producers in doing so.

“Clearer and more transparent action needs to be taken by the two [ministries] to stem this wave of illegal textile imports,” Ernovian said.

“They also need to involve us in the process of preventing illegal imports by working with us in conducting field surveys of importers to see whether they comply with the government’s requirements [to be registered as authorized importers].”

Under current Trade Ministry rules, to be registered as an authorized textile importer, a company must also be a producer, with the volume of imports allowed being proportional to production capacity, as identified by the Industry Ministry.

Responding to Ernovian’s comments, Diah Maulida, the Trade Ministry’s director general for foreign trade, said the Industry Ministry needed to monitor textile importers more closely.

“I would urge the Industry Ministry to do a better job of monitoring importers of textile products to make sure they produce goods here as well, rather than just importing them, ” Diah said on Thursday.

However, Arryanto Sagala, the Industry Ministry’s director of textiles, retorted by accusing the Trade Ministry of failing to properly share information.

“After the Trade Ministry issues importers’ licenses based on our recommendations, they seldom provide us with any further information. Because of this, we’re not able to monitor importers to see whether they’re importing goods legally or not,” Arryanto said.

Verification of compliance with importer-registration requirements is the responsibility of state-owned survey company PT Surveyor Indonesia.

Speaking on Friday, Juniman, a trade expert at PT Bank Internasional Indonesia, said the government had been lax about protecting the local textile industry, which employs 1.84 million people, although he acknowledged that “the government faces a dilemma when they try to meet demands from local producers for lower imports because they’re worried other nations might raise objections.”

By contrast, the Trade Ministry’s Diah said, “The Indonesian government has done a good job of protecting local producers — too good perhaps. Other countries have complained about our strict protection of local producers.”

Juniman suggested the answer may lie in the introduction of quotas.

“We need to discuss fair and reasonable import duties with the exporting countries, and establish a fair and coordinated quota system,” he said.

Sales of domestically produced textiles plunged 33.3 percent to $427.66 million in October, compared with $638.3 million in the same month last year.

According to Diah, about 90 percent of legal textile imports come from China.

Juniman said the plight of local textile producers partly resulted from their excessive reliance on the domestic market.

“Expand your export targets, and investigate nontraditional markets, such as the Middle East,” he said.

“Indonesia produces better-quality products compared with many of our competitors, such as Vietnam and Bangladesh, for example, but production efficiency needs to be improved to result in lower prices.”

Indonesia’s main traditional export markets are the United States, the European Union and Japan.

Speaking at a national textile trade conference on Thursday in Jakarta, Trade Minister Mari Elka Pangestu made similar comments.

“Indonesian textile producers should look to nontraditional markets such as India as it is also a very large market. We are more creative than some of our competitors like China, but lag behind in terms of efficiency,” she said.

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