The Chairman of the Indonesian Textile Association (API), Jemmy Kartiwa Sastraatmaja, has highlighted concerns over the persistence of high-interest rate policies due to the unsatisfactory inflation targets in several countries. According to him, this condition adds to the potential bleakness of the global situation, which could affect the domestic economy, particularly export products.
Moreover, he pointed out that China's dominance as the United States' (US) top trading partner has shifted in 2023. Currently, China has slipped to third place after the European Union (EU) and Mexico.
As a result, China is seeking markets for its textile products elsewhere, potentially targeting weaker markets by deploying trade barriers.
"This impact results in China having to seek markets for its textile products elsewhere, intensifying global competition. China will undoubtedly target weaker markets by deploying trade barriers, whether in the form of tariff or non-tariff barriers and measures," Jemmy told CNBC Indonesia on Monday (26/2/2024).
It is worth noting, he continued, that China is the only country that has lowered its borrowing interest rates and has experienced deflation.
"China just reopened on Sunday (18/2/2024), but it was immediately accompanied by an increase in raw material prices for textiles and textile products such as cotton and viscose, resulting in a 'wait and see' market. Hence, exports can be said to have remained flat," he said.
In line with this, Jemmy expressed concerns that Indonesia might become a dumping ground for Chinese textile products, further eroding Indonesian textile products.
"That's what we're concerned about. And now there are already many of their products circulating in Indonesia," he said.
However, Jemmy emphasized that the national textile industry is very hopeful about the sizable domestic market. Therefore, he believes the government needs to safeguard the domestic market through the implementation of Minister of Trade Regulation (Permendag) Number 36 of 2023 concerning Import Policies and Regulations.
"Hopefully, with the implementation of Permendag number 36 of 2023, which will come into effect on March 10, 2024, it can control the influx of imported textile products into the Indonesian market, thus improving the utilization of the textile industry, both upstream and downstream, up to SMEs," he concluded.