The share of Indonesian domestic textile producers in the national market is going to plunge to 50% by the year-end, down from 65% last year, as a wave of cheap imports to hits the domestic market, said Ade Sudrajat, Deputy Chairman of the Indonesian Textile Association. The domestic market is now estimated to be worth Rp 70 trillion (about US$7.42 billion) by the end of this year.

The latest government data processed by the Textile Research Centre Indotextile shows that textile imports were valued US$1.05 billion in the first quarter of 2009, from $1.22 billion in the same period a year earlier and $1.23 billion in the last quarter of 2008. In addition to illegal imports, the influx of textile imports have also been encouraged by low import duties imposed on Chinese, Japanese, and Korean products.

He said import duties on Chinese textiles averaged 5% because of part implementation of the Association of Southeast Asian Nations-China free trade agreement (AC-FTA). With Japan, he added, almost all of Indonesian textile tariff lines, particularly the sophisticated ones, were already zero because of the Indonesia-Japan Economic Partnership Agreement (IJ-EPA).

Despite API’s suspicions on the explanations for the big jump in imports, the government already has two regulations controlling textile imports: a 2008 Trade Ministry regulation on imports of particular products, which regulates imports of garments; and a 2009 Trade Ministry regulation on imports of textiles, which regulates imports of upstream textile products.

Trade Ministry Director General for International Trade Diah Maulida said that her ministry issued import licenses to importers/producers based on recommendations and verifications provided by the Industry Ministry.