Indonesian Textile Industry Facing Crisis Due To Chinese Imports, Says Apsyfi Chairman
The Indonesian textile industry is struggling despite strong consumer demand, primarily due to an overwhelming influx of Chinese imports, according to Redma Gita Wirawasta, Chairman of the Indonesian Filament Yarn and Fiber Producers Association (Apsyfi). This situation has led to the closure of numerous local textile companies.
Redma criticized the government’s proposal to impose import tariffs of up to 200 per cent on textiles, arguing that it would be ineffective. Despite seeing an 8 per cent growth in Q1 2022 and 13 per cent in Q3, the industry faces significant challenges in exports, although local products have found a market domestically. “Our purchasing power for textiles increased in 2022 and 2023 despite economic downturns,” Redma told a local Indonesian media.
The problem intensified when the government relaxed import restrictions following licensing issues that caused a backlog of 26,000 containers in May 2024. This led to a quick revision of Minister of Trade Regulation No. 36 of 2023 after just three months.
“The issue is imported goods. Consumers spend more on imported textiles and garments, whether online or offline. The decline in our textile industry isn’t about purchasing power,” Redma emphasized.
Chinese e-commerce platforms dominate the distribution chain, worsening the situation. Redma called for tighter controls on imported textiles, both online and offline. “We rely on foreign platforms for sales. If we had a platform dedicated to domestic products, it would be more effective. The current distribution chain, owned by China, favours Chinese goods. The government needs to address this,” he said.
Chinese products, sold at much lower prices, are more attractive to consumers still recovering economically post-Covid-19. This trend continued throughout 2023, with domestic products struggling to compete and illegal imports flooding the market. Illegal goods sold below the cost of production force local industries to cut production costs and reduce employees. Legal products face regulations that illegal goods do not, putting local industries at a disadvantage.
Between January and May 2024, 20-30 factories closed, resulting in 10,800 layoffs, up from 7,200 layoffs in 2023 in Bandung and Surakarta.
Redma warned that without government intervention, layoffs in the textile industry would increase. He advised the government to focus on illegal imports, instead of imposing a 200 per cent import duty, considering Indonesia’s membership in the ASEAN-China Free Trade Area (FTA).
“Everyone is focusing on import duty regulations, but the main issue is illegal imports. Without improvements at port entry points and in Customs’ performance, eradicating illegal imports will be ineffective,” he stressed.
