Chinese textile products can be dumped in Indonesia and hit domestic textile companies Nevertheless, these companies' credit profiles may stay stable over the next 12 or 18 months, because exports account for a high portion of their total sales, and because they maintain long-standing customer relationships and produce a strong range of value-added products that are not easily replaced by imported products.
The US-China trade dispute could lead to an influx of Chinese yarn, fabric and garments into Indonesia, potentially disrupting the so far stable levels of demand and supply in Indonesia by pushing up supply, which would in turn depress prices and hurt local manufacturers. Tariffs imposed by the US on Chinese textile exports are at 25 per cent versus the ten per cent or 15 per cent that Indonesia has implemented.
Indonesia is aggressively signing trade agreements with various countries, such as the European Free Trade Association, India, Australia, Algeria, and Morocco. The aim is to increase exports to Australia, the EU, Chile, Mozambique, Tunisia, Morocco, and the Regional Comprehensive Economic Partnership. In the meantime efforts will be made to harmonize tariffs from upstream to downstream and have competitive energy prices. The country’s main destinations for its textile exports are Europe, the United States and Japan.