T

he textile and textile products (TPT) industry is appealing to the government for help as it faces imminent layoffs from decreased cash flows and declining demand as a result of the COVID-19 pandemic.

Indonesian Synthetic Fiber Producers Association (APSyFI) secretary-general Redma Gita Wirawasta said that increasing garment imports would also leave domestic producers with an even smaller slice of shrinking market due to COVID-19.

“We want the government to provide solutions [...] on how this small market can be given entirely to domestic producers to keep running. Because if such actions are not executed and we don’t have a market anymore, layoffs are not impossible," he cautioned on Monday during a teleconference with industry stakeholders.

Yet garment imports are among a slew of issues that are threatening jobs in the industry, which has been hit hard by the epidemic. The TPT industry absorbs around 135,000 workers per year, or 22.5 percent of 600,000 workers in the industrial sector, according to the Industry Ministry's latest estimate.

The International Labor Organization estimated in a recent report that almost 25 million jobs could be lost as a result of COVID-19.

During the teleconference, Indonesian Textile Association (API) chairman Jemmy Kartiwa Sastraatmadja said the global epidemic had caused a sharp decline in demand over the last 10 days, while current orders had been delayed or even canceled.

But he claimed that the industry was still “fully operational”, and that the association needed to reevaluate the condition of its members due to the “dynamic” nature of everyday changes.

“Indeed, layoffs are a dilemma and we, as API members, are really trying to avoid laying off [employees],” Jemmy said.

The API has requested several aid packages from the government to help prevent the industry from laying off its workers. One way is for state electricity firm PLN to delay electricity bill payments by six months for half of the industry and offer a discount for idle working hours between 10 p.m. and 6 a.m. The association also urged the government to accelerate its plan to push down gas prices to US$6 per million British thermal units (mmbtu).

Regarding trade, the API requested government safeguards for ready-made garments by tightening its licensing procedure for TPT import licenses and to ensure that only raw materials were imported for the domestic industry's use.

Jemmy said the association had also appealed to the government to revise its liquid waste standards, claiming that other countries had looser provisions and that Indonesia's strict provisions had impacted the competitiveness of domestic products.

“These recommendations are critical follow-up measures that we hope the government could consider to ensure the industry’s operational continuity and prevent waves of layoffs as a result of economic contraction from the spread of COVID-19,” he said.

The Industry Ministry’s chemical, pharmaceutical and textile industry director general, Muhammad Khayam, told The Jakarta Post on Monday that he was currently proposing some of the industry’s recommendations, including electricity discounts during peak hours.

He also predicted that electricity fees would decline by 30 percent after gas prices fall to $6 per mmbtu by April.

Khayam also supported tightening the verification process for ready-made products, adding that the government would only import raw materials for domestic producers’ needs. He is currently proposing a three-year safeguard for the industry’s intermediate industry and plans to propose another one for ready-made textiles after the government places a temporary safeguard on TPT products last year.

API vice chairman for international trade Anne Patricia Sutanto suggested a six-month delay for annual tax returns.

Earlier this month, the tax office postponed the tax return deadline from March 31 to April 30 “to ease and provide certainty to individual taxpayers”.

API domestic trade vice chair Chandra Setiawan also decried the government’s latest relaxation of import regulations, warning that this would provide leeway for countries already recovering from their localized outbreaks to flood Indonesia with textile exports and jeopardize the local industry.

Economist Andry Satrio Nugroho at the Institute for Development of Economics and Finance (Indef) said on Monday that the majority of recommendations from the industry made sense in terms of increasing competitiveness as well as avoiding layoffs amid the pandemic. He also noted that imports had long jeopardized the sector.

In its 2019 study, Indef found a 192.21 percent surge in textiles imported through bonded distribution centers, which accounted for 12.07 percent of the country’s textile imports from 2017 through 2018. Imported products could be up to 40 percent cheaper than domestic products, which led to factory closures because many local producers were unable to compete.

Meanwhile, Statistics Indonesia data showed a mere 3 percent growth in textile exports per year over the last 10 years, while imports grew 20 percent per year during the same period.

However, Andry disagreed with revising the government's liquid waste standards for environmental reasons.

He also said that textile producers needed to provide assurances that they would not fire their employees if the industry was granted a safeguard, and cautioned that the government should only impose trade barriers on countries that exported large quantities of textile products to Indonesia while anticipating retaliatory measures.

“Don’t let there be layoffs [even] after the government has granted safeguards and domestic producers start to dominate [markets] in the country. That’s something we don’t want,” Andry emphasized.

— Arya Dipa contributed to this story from Bandung.