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Indonesian Textile Association

Higher import duty on Chinese product will not help Indonesian textile industry
Dated - 04 Mar , 2006

The Indonesian Textile Association (API) has requested the government to impose higher import duties as a safeguard measure, arguing the local industry was threatened by soaring imports from China.

But imposing an additional safeguard import duty on Chinese products would not solve the problems faced by the country's ailing textile and garment industry, it is not the ideal solution instead could lead to only increase the disparity in prices, which could lead to greater smuggling, stated Trade Minister Mari E. Pangestu.

The API argued that safeguard measures had been put in place by the United States and the European Union to protect their local industries from cheaper imports from China.

Ernovian stated that the association is collating the statistics that prove the reality of soaring imports from China, and the price distortions that are caused. According to the API, imports of garments from China increased tenfold to $4.27 million in the first quarter of 2005 as compared to the same period in 2004.

Increasing energy costs, and inefficient and outdated machinery had worsened the sector's performance. As a result of the multiple problems is faced, the sector only grew by 1.5% in 2005, as against 4.3% in 2004. The industry needs to improve its efficiency.

However, an assessment by the Industry Ministry reveals that half of Indonesian textile firms' production facilities are more than 15 years old, and revamping them would cost some $5 billion. Also Chinese counselor for trade and commerce at its Jakarta embassy, Tan Wei-wen, stated that Chinese government has offered loans to help revitalize the Indonesian textile sector. However, the relevant businesses do not seem to be doing anything to follow up on the proposal.

The Japan Textile Federation and the Taiwanese government have also expressed an interest in providing financial support for the sector's revitalization, but have requested the government to guarantee the loans. The Industry Ministry and the textile association stated that they were in the process of auditing those companies that might be eligible for financial support.

article courtesy of
http://www.yarnsandfibers.com

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