Citing the fallout from the pandemic and a subsequent decline in gross domestic product (GDP), the Indonesian government has decided to impose a safeguard tax to help the nation’s apparel industry.

The duty will range from 44 cents to USD 11.29 per piece on ready-made apparels imported from China, Vietnam, Singapore and Bangladesh, and is expected to be imposed within the next 90 days.

 

Last year, the Indonesian Textile Association (API) anticipated a compound annual growth rate (CAGR) of 5 percent for the textile and apparel sector, but COVID-19 wreaked havoc with those plans, with the country’s GDP dropping for the first time since the 1998 Asian financial crisis, contracting 2 percent year-over-year in 2020.

 

An estimated 30 percent of Indonesia’s total production goes toward meeting domestic demand, with the remainder exported to the U.S. (36 percent), the Middle East (23 percent), the EU (13 percent), and China (5 percent).

 

Bangladesh, which already faces a stiff 25 percent tariff for apparel imports into Indonesia, is set to be significantly affected when the duties take effect.

 

China, Vietnam and Singapore currently have duty-free access to the country.

 

“Imposition of additional duties adds to the burden on the industry,” said Mohammad Hatem, vice president, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).