In Indonesia, the allure of cheap prices is hard to resist. One-piece sleepwear sells for as low as 25,000 rupiah at a small shopping center in South Jakarta. However, these products often do not comply with Indonesian regulations and may be illegal imports, as noted by local business players.
Such inexpensive clothes, often unlabeled or labeled in Chinese, flood Jakarta’s markets. While some consumers appreciate the low prices and perceived quality, these products pose significant disadvantages to the local economy and industry and potential health risks.
The main issue with these illegal imports is their non-compliance with Indonesian rules, such as lacking proper labeling in Indonesian, including production and care details. This violation undermines the credibility of local manufacturers who follow regulations. Additionally, there are health concerns, as these products may not meet safety standards and could be made under poor and unsafe conditions.
Economists warn that illegal imports harm Indonesia’s economy by threatening local manufacturers, causing reduced sales, factory layoffs, closures, and depriving the government of tax revenue. In 2023, the Customs and Excise office confiscated illegal goods worth 670 billion rupiah, preventing a loss of 500 billion rupiah in taxes.
The influx of illegally imported products has created an “alarming” situation for Indonesia’s manufacturing industry. For example, small-scale garment makers in Bandung, West Java, spend about 50,000 rupiah to produce a T-shirt, whereas an illegally imported one can be priced as low as 15,000 rupiah. This vast price disparity, driven by the evasion of duties and regulations, places undue pressure on local industries.
The impact is evident in rising layoffs within the domestic textile, garment, and footwear sectors. In 2023, approximately 360,000 workers were laid off, a sharp increase from around 25,000 in 2022. The first quarter of 2024 saw 23,000 layoffs, up from 20,000 in the same period of 2023. Capacity utilization in the textile and garment industry has also plummeted to below 50%, compared to 70% in early 2022.
Illegal imports continue to disrupt the market despite the implementation of safeguard duties on clothing and apparel since 2021. These duties, aimed at protecting local industries from a surge of cheap imports, have proven insufficient against the persistent inflow of illegal goods.
Indonesia faces immense challenges in monitoring all shipping activity, particularly in light of Chinese aggression. The government, alongside the Customs and Excise office, police, and navy, is working to tighten supervision and curb illegal imports, but the fight is ongoing.
