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Indonesia:Textile industry to face tough challenges in US market |
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2004-8-31
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After the abolition of the textile quota system on January 1 2005, Indonesia risks losing competition in the US textile and clothing market as the country should pay higher import duties for the commodity than other supplies to enter the US market, an expert said.
William E James, a Senior Economist at USAID''''s Growth through Investment and Trade (GIAT) project said, “Once the quota system is lifted, tariffs would become the main factor determining access to the US market.”
In expectation of the abolition of the quota system, many countries had been negotiating for a low tariff for the commodity, while Indonesia had yet to make a similar step due to either lack of understanding or concern about the impact of the situation.
"Indonesia should have made a strategy and negotiated for lower tariffs to enter the U.S. market years ago, if it wants to stay competitive," James told sources over the weekend.
He said his organization had talked with the Indonesian government about the matter, but the latter had gave little, if any, response, while the stakeholders of the industry had been focusing their thoughts on different matters.
GIAT''''s data represents that Indonesia now has to pay 9.3 percent and 17.5 percent import duties for textiles and apparel respectively to enter the US market, while Thailand only pays 9 percent and 13.7 percent.
Meanwhile, China, which is expected to expand its domination in the world''''s textile market once the quota system is lifted, now pays a more competitive tariff rate of 12 percent for its apparel.
GIAT estimates 45 percent of Indonesia''''s textile and textile products are at a high risk of being negatively affected by the quota abolition and 20 percent at medium risk.
James further said that the success of Indonesia in luring textile investors or in keeping the current producers in the country would depend, among other things, on Indonesia''''s access to the market. Given this, it is important for Indonesia to negotiate for the lower tariffs to enter the U.S. market.
The industry, which absorbs 1.2 million workers, was the second-largest contributor of foreign exchange earnings among non-oil and gas industries last year, after the electronics industry, with an export value of $7.03 billion or 16.22 percent of total non-oil and gas exports last year.
Textile and apparel exports to the US meanwhile, reached $2.5 billion or 33 percent of Indonesia''''s total export to the U.S. in 2002.
The government has long voiced concerns over the situation in the nation''''s textile industry, which has been fighting hard to compete with new suppliers at home and abroad. However, the government''''s programs have thus far focused on how to provide the industry access to banking loans so that they can rejuvenate their machinery. |
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