The Covid-19 pandemic that has hit Indonesia in the past year has had a negative impact on the economy. One of the sectors that was badly affected by this pandemic is textiles and textile products (TPT).
Secretary General of the Indonesian Small and Medium Industry Entrepreneurs Association Widia Erlangga said, with the Covid-19 pandemic one year ago, it directly affected the decreasing production capacity of local manufacturers.
Although basically most of the local textile manufacturers, which previously allocated nearly 70 percent of their total production for the export market, were then constrained by the export process during the Covid-19 pandemic, so that their production results had to be diverted to meet the needs of the local market. to stem the increase in the price of raw materials of this type.
According to Widia, the facts in the field reveal that the actual demand in the domestic or local market has actually decreased quite significantly. However, this decline in demand cannot be accommodated by stocks of manufactured goods from local manufacturers in the local or domestic market.
“This is further exacerbated by the ease of entry of finished goods (garment) imported from China and Thailand to Indonesia, where the selling price of imported finished goods is much cheaper than the production of IKM players who are hit by high raw material prices,” he said. him in a written statement in Jakarta, Friday (19/3/2021).
“In this case, IKM players find it very difficult if they have to reduce the price of their finished goods in order to compete with the price of imported finished goods that are currently flooding domestic markets, because the increase in raw material prices directly affects the high production costs they have to pay. responsibility, “he continued.
This is also coupled with the enactment of Government regulations contained in the Minister of Finance Regulation (PMK) No.161 / PMK 010/2019, PMK No.162 / PMK. 010/2019 and PMK No.163 / PMK.010 / 2019 related to the imposition of Temporary Safeguard Measures (BMTPS) / Safeguards import duties on textiles and textile products (TPT) imports in November 2019 ago.
However, for the IKM players in the convection or garment sector, the increase in raw material prices for them has now risen by up to 30 percent. This is considered to be even more difficult for them in terms of obtaining raw materials for the sustainability of their current business. Several types of locally produced fabrics such as Rayon and Cotton, which are used by IKM players in the convection sector in big cities such as Solo and Bandung, have actually increased significantly, ranging from 20 percent to 30 percent per yard.
“This is because, since the implementation of the safeguard policy for imported textile raw materials, there has been an imbalance in the amount of supply and demand for the types of fabric raw materials. Previously for these types of raw materials, supply was obtained from the production of local and imported manufacturers, now it is only obtained. only from local manufacturers, where the production capacity of these local manufacturers is still not sufficient to meet the needs in the domestic or local market, “he explained.
Then, said Widia, the safeguard policy for textile raw materials itself is actually one of the ways the government takes to boost the production of local textile manufacturers which they previously complained about because they feel that the amount of imported textile raw materials entering Indonesia makes their products unable to be obtained. maximum absorption by the domestic market. However, it should be within 1.5 years, local fabric producers are expected to increase their production figures.
It is not a secret that before the implementation of the safeguard for textile raw materials, the machine capacity of local manufacturers used only reached about 50 percent and there was still 50 percent remaining production capacity. However, in reality the production capacity did not show a significant increase, this is unfortunate and it is necessary to confirm with the local producers.
“Because if back at the beginning the safeguard policy for textile raw materials was approved and carried out by local textile raw material manufacturers, they promised that they would meet domestic raw material needs, but the facts in the field are the opposite, when the safeguard policy was implemented, for 1.5 years, in fact the price of local textile raw materials could increase by up to 30 percent.
Then the problem of capital which is expected to be one of the solutions for IKM players to be able to import machines, and assisted by the government with the remaining 25 percent of financing, 75 percent of which can be obtained through KUR (People’s Business Credit), according to Widia, is only a sweet promise from the government because felt less right.
Because, the majority of IKM players have poor credibility so that it is difficult for banks to accept it, one of the factors related to this is the outstanding credit of IKM players after being affected by the impact of the Covid-19 pandemic.
“In just this one year, there have been many IKM players who have had to reduce the number of their workers on a large scale, some of them have even been forced to close their businesses, which has increased the current unemployment rate. As we all know, the IKM sector is one of the type of business which is a type of labor-intensive business that can provide a large enough job opportunity for the informal sector, “said Widia.
“The government must act quickly, because the safeguard policy taken by the Government should not be used as a loophole by a handful of parties who take advantage of the situation, and the IKM parties who are disadvantaged by the policy, even though the policy is recognized as a form of protection for the domestic textile industry from attacks. imported raw materials, “he concluded.