Textile Factory - Photo by PT Sri Rejeki Isman

JAKARTA (TheInsiderStories) – The Indonesian government has imposed temporary additional duties on imports of textiles and textile products up to 67.70 percent, said finance ministry last week. The fresh move is a safeguard measure to protect the domestic upstream industry from a recent surge in imports and encourage the use of domestic market products.

The policy is regulated in three finance minister regulation number PMK 161/PMK.010/2019, PMK162/PMK.010/2019, and PMK 163/PMK.010/2019, which can be accessed on the official website of the ministry.

Through PMK 161/PMK.010/2019, the finance ministry has determined temporary additional duties for yarn products – other than sewing thread – from imported synthetic and artificial staples starting from Rp1,405 (US$0.10) a kilogram.

Meanwhile, in PMK162/PMK.010/2019, the ministry has also set temporary additional duties for imported fabric products ranging from Rp1,318 to Rp9,521 a meter and ad valorem rates ranging from 36.30 percent to 67.70 percent.

Then, in PMK 163/PMK.010/2019, the ministry imposed temporary additional duties on curtains products, blinds, bed nets, and other furniture items imported at Rp41,083 a kilogram.

The director of international customs and inter-institutions, Syarif Hidayat, revealed that the temporary additional duties were applied to several tariff posts in the Indonesian customs tariff book.

“The temporary additional duties are applied to the import of yarn products (other than sewing thread) from synthetic and artificial staple fibers by 6 tariff posts,” Hidayat said in a written statement on Saturday (11/09).

He continued, The curtains products, inner blinds, bed nets, and other furniture items are eight tariff posts, and fabric products are 107 tariff posts, with the tariff rates listed in the regulation. He added, the rules will be implemented on Nov. 9, and will be valid for two hundred days.

While, to ensure the implementation of this rule runs smoothly without ignoring the supervision of imported goods, the ministry through customs and excise can conduct a physical inspection based on risk management in accordance with PMK 225/PMK.04/2015 concerning customs inspection in the import sector, it said.

Lately, Indonesia has seen a jump in imports of textiles and textile products. The Indonesian Trade Safeguard Committee recently launched an investigation into the upturn in fabric imports after a complaint was filed by the Indonesian Textile Association.

From the preliminary evidence put forward in the complainant, the committee found a sharp increase in fabric imports. Moreover, there was a preliminary indication of serious damage or potentially serious damage to the domestic industry.

Previously, Moody’s Investors Service rated that the United States (US) – China trade dispute could lead to an influx of Chinese yarn, fabric, and garments into Indonesia. It said, potentially disrupting the so far stable levels of demand and supply in Indonesia by pushing up supply, which would, in turn, depress prices and hurt local manufacturers.

Moody’s explains that tariffs imposed by the US on Chinese textile exports are at 25 percent versus the 10 – 15 percent that Indonesia has implemented.

“The Indonesian textile companies that we rate are not immune to the dumping of Chinese textile products in Indonesia, should it occur,” says Stephanie Cheong, a Moody’s Analyst in the latest report.

She continued, “Nevertheless, these companies’ credit profiles should stay stable over the next 12-18 months, because exports account for a high portion of their total sales, and because they maintain long-standing customer relationships and produce a strong range of value-added products that are not easily replaced by imported manufactures.”

Moody’s points out that while there are fears that Chinese companies will redirect their textile products to Southeast Asia, including Indonesia, initial trade data estimates published by Bank Indonesia for the six months between January and June 2019 show that the year-over-year value of imports and exports has broadly held steady.

US$1: Rp14,000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com