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Indonesian textile sector awaits EFTA deal
Jan '16
As Indonesia struggles to come out of a stubborn economic slowdown, the country's textile industry is hoping a free-trade agreement with four non-EU countries will give local garment and footwear manufacturers greater access to the European market.

Indonesian Textile Association (API) chairman Ade Sudrajat said that the agreements with Switzerland, Norway, Iceland and Liechtenstein, collectively known as the European Free Trade Association (EFTA), could also provide access to other European countries as well, a leading Indonesian newspaper has reported.

“While the countries are small in size and population, their per-capita income is relatively high … and there's a chance for an agreement between the EFTA and the EU that will ease the flow of our products,” he said.

According to Ade, Indonesian textile products are currently subject to import tariffs between 11 and 30 per cent in the four countries. Reducing tariffs to zero per cent would make Indonesian goods more competitive.

Ade also said that EFTA markets holds great potential for Indonesian textile products because of fashion trends in those countries through the four seasons of the year.

Indonesian Footwear Association (Aprisindo) chairman Eddy Widjanarko said while an agreement with the EFTA would definitely help increase shoe exports to the four countries, an exponential increase is unlikely, the newspaper reported.

Footwear and apparel are among Indonesia's foremost export goods to the EFTA countries. Indonesian footwear exports to the EFTA countries more than doubled from $46.87 million in 2010 to $93.26 million in 2014, when they accounted for almost 18 per cent of total Indonesian exports to the four countries, according to EFTA data. Woven and knitted apparel contributed a further 20 per cent of Indonesian exports to EFTA countries.

While the textile and footwear industry wait for the FTAs, Mahmud Syaltout, an international trade law and policy expert with the University of Indonesia (UI), has argued that the government needed to aim for a wider partnership with the EFTA countries, as trade links were “already good”.

He said the government could lobby for more investment from the four countries, transfer of technology and greater involvement in the global value chain.

The Indonesian government would resume trade talks with the EFTA countries this year and seek for lower tariffs on processed agricultural goods as well as bigger investment in various sectors. (SH)

Fibre2Fashion News Desk - India

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