Impact of Predatory Pricing in Social Commerce, West Java Textile Industry Threatened to Stop Production

Coordinating Minister for SMEs Teten Masduki together with industry players in finished clothing and textiles in Majalaya District, Bandung, West Java. (Photo: Doc. Kemenkop UKM)

JAKARTA - Minister of Cooperatives and SMEs (Menkop UKM) Teten Masduki visited several textile factories in Majalaya District, Bandung, West Java, on Sunday, September 24.

He witnessed firsthand the current conditions of the factory and received complaints from several textile SMEs there.

During his visit, a number of textile business actors were also present, including the Indonesian Textile Association (API), the Bandung Convection Entrepreneurs Association (IPKB), the Majalaya Textile Association, and the Bandung Regency KADIN.

Teten believes that business actors and the textile industry in West Java (West Java) are threatened with stopping production due to the impact of predatory pricing practices on social commerce platforms.

"We, together with apparel and textile industry players, discussed this matter and indeed there was a quite drastic decline because MSME players who produce Muslim clothing, headscarves, ready-made clothing were monitored in wholesale markets, such as Tanah Abang, ITC Kebon Kelapa, Andir Market. "dropped. As a result, demand for clothes, fabrics and textiles dropped drastically," said Teten in a written statement, quoted Monday, September 25.

He said that their products were unable to compete not because of quality, but because of the price which was not included in the Cost of Goods Sold (HPP) of textile SMEs/IKMs who were unable to compete.

"I received information that there are indications of widespread uncontrolled imports of ready-made clothing and textile products. This low price is predatory pricing on online platforms, hitting offline traders and the convection production sector as well as the textile industry is being flooded with very cheap products from abroad," said Teten.

According to Teten, this also happened because it was encouraged by the safe guard regulations which did not work properly. Therefore, the government is trying to improve and coordinate with the Minister of State Secretary (Mensesneg) for future steps.

"Because once again, this authority lies with the Ministry of Trade (Kemendag) and the Ministry of Finance (Kemenkeu). President Jokowi has also said that as soon as possible there will be a law that regulates it. The President has said that he will review online trading, which will be discussed in the near future, " he said.

Not only that, Teten also feels there is a need for special HPP for textile products. Because in China itself, they apply a model that goods entering there cannot be below COGS. "If we implement it, it can protect domestic industry," he said.

On the same occasion, General Chair of the Indonesian Textile Association (API) Jemmy Kartiwa Sastraatmaja said that currently global trade is not doing well.

China, which is the world's largest producer or manufacturer, many of its goods are not absorbed by large countries, such as the United States (US) and the European Union. So, they try to look for new markets where trade barriers are weak.

"Don't let Indonesia just be used as a market, because Indonesia is the country with the fourth largest population in the world. It's no wonder that Indonesia is targeted to become one of the market shares. If you are not smart about installing trade barriers, this ecosystem will be destroyed with impacts upstream," he said.

Meanwhile, General Chair of the Bandung Convection Entrepreneurs Association (IPKB) Nandi Herdiaman added that the attack on imports whose prices were below market had driven low demand, including what happened in Tanah Abang, Central Jakarta.

"The impact is that there is a decline in production, not just one or two factories, but even thousands. Plus the impact of unemployment is even up to millions," he explained.

The textile factory in Majalaya District, Bandung, West Java is an example of an area where residents run textile businesses on weekdays with busy production activities.

However, since Eid until now, the decline in production has continued until several factories are no longer able to continue producing.