Heaptalk, Jakarta — Indonesian Minister of Industry Agus Gumiwang Kartasasmita has voiced concerns over the collapse of Sritex, a major domestic textile company, and several other industry players. The Minister attributed the downfall to the rampant smuggling of illegal textile products into Indonesia. Additionally, he noted that the influx of cheap, legally imported goods has exacerbated the challenges faced by the domestic textile sector.
“Two main factors are undermining our industry: illegally imported goods and the influx of cheap legal imports,” Agus explained.
Agus urged that actions against smuggling and illegal imports must not be mere token gestures. He called for consistent enforcement by the Directorate General of Customs and Excise at the Ministry of Finance, emphasizing the need for stringent monitoring at significant ports and along more minor, less regulated routes.
“We look forward to measures to combat smuggling and illegal imports won’t be superficial or fleeting. Moving forward, Customs and Excise must consistently enforce regulations. Monitoring and enforcement should target large entry points and smaller, unofficial routes,” he emphasized.
Agus also pointed out that the domestic industry is struggling under the pressure of cheap illegal imports flooding the market, compounded by regulatory frameworks that overly facilitate legal imports.
“Our industries suffer because low-cost illegal goods dominate the domestic market. Moreover, some regulations offer excessive latitude for legal imports to enter Indonesia,” he added.
Increased Smuggling and Enforcement Statistics
Earlier this year, the Finance Ministry reported a significant rise in enforcement against smuggling activities. From January to October 2024, the Directorate General of Customs and Excise noted about 31,275 cases, with the confiscated goods valued at Rp6.1 trillion, representing a 10% increase compared to a similar period last year.
Finance Minister Sri Mulyani Indrawati explained that the rise in smuggling activities frequently involves surplus textile production from other countries, exacerbated by high tariffs imposed by traditional export markets.
“Excess production from other countries frequently spills into Indonesia illegally. This situation arises because specific export destinations impose prohibitively high tariffs. We aim to align our policies with the Industry and Trade Ministry to address these challenges effectively,” Sri Mulyani affirmed.
The Finance Minister highlighted the need for balanced protective measures in the textile and garment industry. For instance, overly high tariffs on upstream textile materials could adversely affect the downstream garment production sector.
“Textile production involves both upstream and downstream activities, such as garments. If upstream textiles are heavily protected, domestic garment production will also feel the impact,” she concluded.
With concerted efforts across government ministries, Indonesia aims to shield its domestic industries from the adverse effects of illegal and unfair trade practices while fostering a sustainable business environment for local producers.
