Indonesian textile firms not immune to trade war: Moody's

28 Aug '19

2 min read

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The US-China trade dispute could lead to an influx of Chinese yarn, fabric and garments into Indonesia, potentially disrupting the so far stable levels of demand and supply in the country by pushing up supply, which would in turn depress prices and hurt local manufacturers, according to a new report released recently by Moody's Investors Service.

Moody's explains that tariffs imposed by the United States on Chinese textile exports are 25 per cent versus the 10-15 per cent that Indonesia has implemented.

"The Indonesian textile companies that we rate are not immune to the dumping of Chinese textile products in Indonesia, should it occur," says Stephanie Cheong, a Moody's analyst.

"Nevertheless, these companies' credit profiles should stay stable over the next 12-18 months, because exports account for a high portion of their total sales, and because they maintain long-standing customer relationships and produce a strong range of value-added products that are not easily replaced by imported manufactures," adds Cheong.

Moody's pointed out in a press release that while there are fears that Chinese companies will redirect their textile products to Southeast Asia, including Indonesia, initial trade data estimates published by Bank Indonesia between January and June 2019 show that the year-over-year value of imports and exports has broadly held steady. (DS)

Fibre2Fashion News Desk – India

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