The Indonesian Textile Association (API – Asosiasi Pertekstilan Indonesia) is hoping for progress this year in inter-governmental trade talks with the US and EU, giving a boost to textile exports to these key markets.
API executive secretary Ernovian Ismy says: “With the United States, we’re trying to have a preferential tariff agreement. We import a large amount of cotton from the United States and we want our products to enter the US with low tariffs.”
Ismy is also looking for progress in talks between Indonesia and the EU, towards a “comprehensive economic partnership agreement,” which could result in reduced trade barriers and trade liberalisation in various sectors, including textile, footwear and garments. Currently, the EU imposes a 12% tariff on many of these products exported from Indonesia. “If they reduce the tariff, or remove it, our exports to the EU could triple,” he says.
Ismy is keeping a close eye on competition from fellow south-east Asian country Vietnam, which has struck a trade liberalisation agreement with the EU, allowing it to enjoy a zero per cent tariff rate for its products, including textiles.
And he will be heartened by comments from Indonesia industry minister Airlangga Hartarto, who has explained textiles and clothing are among priority sectors in the government’s negotiation with the EU. “Our products are highly competitive, so naturally they would want to impose barriers,” he said, in remarks released in a recent communiqué.
Hartarto said the government was also committed to improving the country’s investment climate including by introducing fiscal incentives such as tax allowances and tax holidays, strengthening industry to take advantage of any trade deals.
Indonesia’s textile and clothing exports were worth US$11.83bn in 2016, according to the API. And the association is projecting that these exports will have grown 4% year-on-year during 2017. The industry ministry has said it hopes that Indonesia’s textile and textile product exports could rise to US$15bn in value by 2019.
Around 32% of Indonesia’s textile and textile product exports go to the US, while exports to the EU account for nearly 15%, according to the API.
Imports of textiles and clothing into Indonesia were worth US$8.1bn in 2016, with China and South Korea the dominant sources.
Ismy reveals that, should orders rise, the country’s textile industry was ready to respond, given that its textile manufacturers are currently only operating to 80% of their capacity, on average.
He explains that high energy costs are still inhibiting industry growth and deregulation, and other reform measures introduced by the government in 2015 and 2016 have yet to be effective in reducing companies’ red tape burdens.
An electricity bill discount of 30% for usage from 11pm to 8am has not been effective, because it does not match standard working hours and so has not benefited companies, he says. The Ministry of Energy and Mineral Resources has said it cannot reduce controlled gas prices because lower prices mean less revenue to Indonesia’s important hydrocarbon sector and could discourage investment, it warns.
Source: www.wtin.com