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Indonesia extends textile import tariffs amid industry slump

The Indonesian government has announced a three-year extension of safeguard tariffs on imports of textiles, carpets, and other fabric coverings to protect and enhance the competitiveness of the domestic textile industry.

The extensions were outlined in two new Finance Minister Regulations, PMK No. 48/2024 for textiles and PMK No. 49/2024 for carpets and other fabric coverings.

Local news outlet Jakarta Global said the tariffs come as the textile and textile product (TPT) sector continues to struggle with declining domestic and export demand, as well as increasing competition, particularly from Chinese imports.

The site explained how the decision to extend the tariffs follows a concerning trend in the industry's employment figures. The influx of textile imports, particularly from China, has triggered a drop in employment, with the workforce declining from 3.98 million in 2023 to 3.87 million in 2024.

Febrio Kacaribu, head of the fiscal policy agency at the Ministry of Finance, shared with the news site: "The government is closely monitoring this situation and providing solutions to support the long-term recovery of the TPT industry's fundamentals."

This decline is part of a broader pattern of job losses in Indonesia, with the Manpower Ministry reporting 32,064 layoffs between January and June 2024, a 21.4% increase from the same period last year.

Jakarta Global mentioned that the Indonesian Filament Yarn and Fiber Producers Association (Apsyfi) reported how around 30 textile factories shut down between January and May 2024, resulting in 10,800 layoffs. This figure is significantly higher than the 7,200 layoffs reported in 2023 in Bandung and Surakarta alone.

Further highlighting the textile industry's plight, the Confederation of Indonesian Workers (KSPN) said nearly 50,000 layoffs in the TPT industry from January to early June 2024. However, Jakarta Global claims the true extent of job losses may be underreported, as many companies are reluctant to disclose layoffs to avoid impacting their relationships with banks and buyers.

The hardest-hit regions were said to be West Java and Central Java, which host the largest concentration of textile industries in the country.

The latest data to come from the US Office of Textiles and Apparel on the top ten suppliers of apparel to the US, Indonesia saw market share fall by -0.3% while the country's shipment volumes slid 7.2% to 47m SME.