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Experts warn of further textile layoffs due to relaxed import rules

Jakarta Globe - June 14, 2024

Leonard AL Cahyoputra, Jakarta – Since the start of 2024, around 13,800 workers in the textile industry have been laid off. Experts foresee a second wave of mass layoffs due to a regulation easing the influx of imported goods.

Rizal Tanzil Rakhman, a textile industry observer and former Secretary-General of the Indonesian Textile Association (API), emphasized the need for the government to revise Trade Minister Regulation No. 8 of 2024, which concerns import policies.

"The government must address this issue immediately. They need to understand the textile industry's situation, listen to stakeholders, and implement necessary changes," said Rizal, who also serves as an executive at the textile nonprofit Rantai Tekstil Lestari (RTL), in an interview with Beritasatu.com on Thursday.

Rizal warned that if the government remains passive, the textile industry will suffer further, leading to more mass layoffs.

"The potential for further layoffs is significant. Layoffs are a last resort for the industry to cope with current conditions. It's not an easy decision, but it might be necessary for survival," he explained.

Rizal highlighted that Regulation 8/2024, which allows more textile imports, could severely damage the domestic industry and its economic ecosystem. This regulation has led to an influx of imported garments, reducing the utilization of the local textile industry and causing delays or cancellations of orders in small and medium industries.

"Our workforce in the sector is nearly 4 million jobs. The impact also extends to small businesses that support the industry. When a textile factory shuts down, the impact is not only on the workers but also on the surrounding community," he added.

Rizal urged the Trade Ministry to engage in intensive dialogue with textile industry players through the Industry Ministry and relevant associations to understand and meet their needs.

Nandi Herdiaman, Chairman of the Bandung Garment Entrepreneurs Association (IPKB), revealed that about 20 percent of small and medium-sized garment industries in Bandung, West Java, have already shut down due to relaxed import regulations.

"The garment sector is already affected, with 20 percent of small businesses closed. If Regulation 8/2024 is not revised, I predict 70 percent of small garment businesses will shut down," Nandi stated in Jakarta on Wednesday.

Nandi expressed confusion over Trade Minister Zulkifli Hasan's stance. During the Covid-19 pandemic, four ministers visited garment factories and saw their dire conditions firsthand.

"Back then, the ministers, including the Trade Minister, understood that many small businesses were shutting down due to imports. The Trade Minister was very supportive of the domestic industry, so it's surprising that Regulation 8/2024 was issued, opening imports widely," he said.

According to Nandi, the regulation's implementation had an immediate impact on the garment small industry. Online sellers and resellers, who previously collaborated with the garment industry, stopped their cooperation and shifted their orders to imports.

"If Regulation 8/2024 is not revised, expect higher unemployment rates in Indonesia. This policy will kill the garment sector. We need policies that support the sustainability of the garment industry," he asserted.

In May, the government revised the regulation on import policy due to import delays at Indonesia's busiest ports, Tanjung Priok in Jakarta and Tanjung Perak in East Java. Additionally, the Finance Ministry issued a new decree reinstating the List of Prohibited and Restricted Import Goods.

The delays were caused by confusion over the previous regulation, particularly around technical consideration regulations under the Industry Ministry's authority. The revised regulation has led to the release of several commodity groups that have met import licensing relaxation requirements, including iron and steel products, textiles, bags, and electronics. The Customs and Excise Directorate has released around 25,000 containers of imported goods that were previously detained in the ports.

Source: https://jakartaglobe.id/business/experts-warn-of-further-textile-layoffs-due-to-relaxed-import-rule