Why Is It Difficult For Local Brand Clothes To Compete With Imported Used Clothes?

JAKARTA - Minister of Finance (Menkeu) Purbaya Yudhi Sadive has ambitions to control the import of used clothes. Pasar Senen, which has been famous for its used imported clothes, will be replaced with domestically made products.

Minister of Finance Purbaya highlighted the trend of importing used clothes in the form of a press ball, which is considered to be at risk of damaging the textile and domestic garment industry. He also emphasized his desire to curb this illegal practice.

In the midst of these efforts, it seems that Purbaya's desire to control the clothes of used imports was opposed by the Thrifting clothing traders who rejected the plan.

"I also monitor TikTok to see what the public's response is. Apparently there are also many traders, they live from there, they are traders, they are angry with me," said Purbaya in a working meeting with Committee IV DPD at the Senayan Parliament Complex, Jakarta, Monday (3/11/2025).

As compensation, imported clothing that has been filling Pasar Senen will be replaced by domestically made products. Minister of Finance Purbaya promised that the business at Pasar Senen would not be closed.

In recent years, trend-thriphing has indeed become a concern. The existence of used imported clothing is said to threaten local MSMEs. The onslaught of imported used clothing is one of the main causes behind the sluggishness of the Indonesian textile industry and textile products. In the end, domestic textile companies were forced to terminate their labor relations (PHK).

Based on data from the Indonesian Textile Association, 20 to 30 factories stopped operating in the first semester of 2024. Around 10,800 workers in the industry experienced layoffs.

The Central Statistics Agency (BPS) report processed by the Ministry of Industry also showed a decrease in the number of textile industry workers by 7.5 percent from 2023. The trend also hit the finished clothing industry by shrinking the number of workers 0.85 percent compared to 2023.

Executive Director of the Institute for Development of Economic and Finance (INDEF) Esther Sri Astuti said that sales of theft were the mastermind behind the worsening of the domestic textile industry.

The import volum of used clothing eroded 15 percent of the market share of domestic textile producers. In addition to adding piles of garbage due to the loss of clothing that was not sold, imports of used clothing were also illegal because they violated at least two regulations.

The regulation in question is the Regulation of the Minister of Trade (Permendag) Number 51/M-DAG/PER/7/2015 concerning Prohibition of Imports of Used Clothes and Permendag Number 18 of 2021 concerning Prohibited Exports and Goods Prohibited from Imports.

"Imports of used clothes in Indonesia also do not pay taxes and excise duties because they are prohibited so stealing used clothes will harm the state," said Esther.

However, banning imports without alternative solutions can also have a social and economic impact on thousands of small traders who depend on income from businessmaking, according to Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira.

"The government should not only focus on prohibition. There must be a compensation program and a transitional strategy for small traders who have been living on imported clothing sales," said Bhima.

Until now, said Bhima, there has been no clear strategic exit plan for MSME players in the sector. He highlighted the absence of assistance schemes to switch to domestic products, as well as partnerships with SOEs so that MSME players can survive.

There is no mentoring program or partnership for thrifting players to switch to other products. Even though the government can prepare cheap financing or partnership models with SOEs," he said.

According to him, if this policy is implemented without a comprehensive approach, the economic risk will actually appear at the downstream level. Many traders in large markets such as Pasar Senen or Pasar Baru can lose their livelihoods, while the flow of illegal goods has the potential to continue to enter through unofficial channels.

Regarding the plan of the Minister of Finance for Purbaya to replace thrifting products with local brands, Bhima assessed that this would be difficult because used clothes have a lower middle market.

According to Bhima, used imported clothing has segmentation in the lower middle class at low prices even though it is still branded. Meanwhile, local clothing must compete with imported clothes whose markets are middle and upper.

"Traders of clothing must be rational, want to sell goods if someone buys it. You have to check the segment as well as not local clothes that are substitutes," he said.

If the government really wants to replace Thrifting with local products, then it must be ensured that traders will still get the same margin. In addition, the government can also provide capital assistance through the people's business credit priority (KUR) in low interest to local traders and clothing producers.

"Aggregation of local clothing data, have you all received cheap credit from the government? If not, it is certain that government incentives can make local clothing competitive," Bhima explained.

Bhima also highlighted the trend of youth modes as a challenge for local clothing. To remain relevant, Bhima assessed that local products need to continue to improve and adapt to the latest models.