Textile Association Calls Eradication Of Illegal Imports Needs To Be Supported By Law Supremacies

Textile (intermediate)

JAKARTA - The national textile industry welcomes the steps taken by the Ministry of Finance (Kemenkeu) in eradicating illegal imports as a follow-up to President Prabowo Subianto's direction to optimize revenue from shadow economic activity (shadow economy).

Chairman of the Association of Indonesian Filament Filament Rate and Benang Producers (APSyFI) Redma Gita Wirawasta said illegal import practices were one of the main causes of the decline in the performance of the textile and textile product (TPT) industry.

In the last 10 years, this sector has entered a deindustrialization trend exacerbated by Sritex's bankruptcy, closing the Shoe Bata factory and closing 30 textile companies that laid off hundreds of thousands of employees in the last two years.

"Although there are different views between ministers, we are sure that President Prabowo will consistently eradicate illegal imports in order to create a clean bureaucracy and save the national TPT industry," said Redma in a written statement received by VOI, quoted Monday, November 25.

Redma also appreciated the role of the Coordinating Minister for Political, Legal and Security Affairs in leading decisive steps to address this issue. According to him, eradicating illegal imports requires extra efforts because it involves many parties, including law enforcement officers who protect these activities.

Executive Director of the Islamic Student Association (KAHMI) Alumni Corps Rayon Textile Agus Riyanto also emphasized the importance of consistency in eradicating illegal imports. He reminded that international trade map data is the main indicator to assess the success of this effort.

"As long as the trade difference is still large and cheap goods sold without VAT are still flooding the domestic market, it means that illegal imports are still there," he said.

Agus also criticized the view of the Minister of Finance (Menkeu) Sri Mulyani Indrawati who blamed oversupply and the high trade barriers in a number of export destination countries as the main trigger.

He emphasized that the Minister of Finance's priority task is to increase the integrity of the Customs and Excise apparatus and improve the customs system.

Meanwhile, the Indonesian Textile Consumer Foundation (YKTI) protested the plan to increase VAT to 12 percent. YKTI Executive Director Ardiman Pribadi assessed that this increase would be fully borne by end consumers.

Ardiman explained that in the long supply chain of textile production, 11 percent VAT currently actually has an effective burden of 19.8 percent in final consumers. With the increase in VAT to 12 percent, this burden increased to 21.6 percent.

"In the midst of the weakening purchasing power of the people, the increase in VAT can actually reduce textile consumption, which in the end is counter-productive to the government's goal of increasing revenue," he said.

Furthermore, Ardiman suggested that the government should focus more on eradicating illegal imports, which according to data in the last five years has led to the potential loss of state revenue of up to IDR 46 trillion.

"By eradicating illegal imports, state revenues can increase by Rp9 trillion per year without having to increase VAT," he said.

In fact, Ardiman is optimistic that the eradication of illegal imports will revive the domestic TPT industry. According to him, textile factories that increase their production capacity will create new jobs, increase people's income and encourage consumption.

Thus, state revenues from VAT will grow naturally along with the increasing economic activity of the community.