Indonesia raises import tariff

25 Jul '15

2 min read

Indonesia has raised import tariffs on more than a thousand items covering many consumer goods such as clothes, food and cars to arrest an economic slowdown and falling retail sales, according to media reports. Economists have warned it would fuel inflation and noted firms faced bigger problems than foreign competition.

For clothes, the new import tariffs were raised mostly to between 15 per cent and 25 per cent, the government said. T-shirts, used clothes and corsets, will be levied duty between 22.5 and 35 per cent.

"Domestic industry is being overwhelmed by the flows of imported goods. We need to curb these flows so domestic products would not be outnumbered," Heru Pambudi, the customs and excise tax director-general, told reporters in Jakarta.

Business groups have cheered import duty rises on a wide range of manufactured goods, expressing hope of a boost to domestic industry amid the current economic slowdown.

Indonesian Textile Association (API) chairman Ade Sudrajat said that the tariff increases would be beneficial to the domestic manufacturing industry, allowing fairer competition between locally made and foreign goods.

In the textile industry, significant production costs caused by higher energy costs and labor wages hinder competition with cheaper imports.

Textile manufacturers have felt the major impact of higher costs and weak demand. Indonesia's economy grew by only 4.7 per cent in the first quarter, the lowest rate in nearly six years.

The textile industry trimmed production by 20 per cent in the first quarter of this year and maintained low output through the second quarter, decreasing factory utilisation. (SH)

Fibre2Fashion News Desk – India

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