Ian Syarif, Deputy Chairperson, Indonesian Textile Association says, the country will adjust its value added tax (VAT) rates on April 1, 2022. There were still be many gaps in application of VAT regulation as many businesses, especially fashion retailers, do not comply with the 11 per cent VAT creating an unfair playing field. The policy is even more punishing for entrepreneurs who regularly pay taxes, adds Syariff. A free market mechanism is likely to occur if buyers are not given a choice, he adds.

Highlighting online sale of used clothes, imported fabrics, and thrift store clothes, Syariff urges the government to apply VAT to the e-commerce sector also in order to create a fair playing field. Unless the VAT regulations are improved, the clothing industry will continue to suffer, Syariff adds.