Indonesia to tighten textile import rules following influx of goods: official

[October 11, 2019]  JAKARTA (Reuters) - Indonesia's Trade Ministry will tighten restrictions on textile imports in an effort to protect local industries, an official told reporters on Friday.

The ministry will require all textile importers to gain approval from the government before they can ship in textile goods, foreign trade director general Indrasari Wisnu Wardhana said.

The revision to regulations is targeted to be issued before President Joko Widodo, who takes office for the second term on Oct. 20, appoints new cabinet ministers, he said.

The restriction is aimed at protecting local producers of products such as certain types of yarns, fabrics and other goods.

"So products that have been produced domestically, should no longer be imported," Wardhana said.

Ade Sudrajat, chairman of Indonesia's Textile Association (API), said the domestic textile industry has weakened in the past three years due to an influx of imported textiles, combined with sluggish consumption by Indonesian consumers.

Imports of textile fabrics rose by 74% between 2016 and 2018, the trade ministry said citing data from the statistics agency. Indonesia imported 413,813 tonnes of fabrics in 2018, it said.

Imports of other textile products, such as some types of synthetic yarns doubled in three years to 2018, the ministry said.

Indonesia bought such products from China, South Korea, Thailand and Vietnam, among others, the ministry said.

A company belonging to Indonesia's Duniatex group last month missed a coupon payment on its $300 million bonds as it faces a cash shortage resulting from tough competition with imported products.

Indonesia's customs office also said that an increasing volume of smuggled used clothing had been found. The country does not allow imports of second-hand garments.

The API also hopes the government would relax textile and garment industry rules to help local businesses boost their exports.

"We are encouraging our members, who so far are more orinted to local markets, to become more export oriented," said Anne Patricia Sutanto, deputy chair of API.

She said should the government ease export regulations, local textile producers could boost exports eight-fold in the next ten years.

Indonesia in 2018 exported $13.2 billion worth of textile goods.

(Reporting by Bernadette Christina Munthe; Writing by Fransiska Nangoy; Editing by Toby Chopra)

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