Indonesia wants to reduce its dependence on imports of raw materials for its garments industry. Therefore, it plans to impose a filament yarn anti dumping duty (KADI). The idea is to import substitute local products as raw materials. At present nearly 50 per cent of the capital goods and raw materials in the country are imported. The focus will be on integrating the upstream and downstream textile sectors.
Indonesia has a comparative advantage for labor-intensive industries and a sizable domestic market. The geographical distribution of the Indonesian textile industry is concentrated on the island of Java. Almost 90 per cent of the textile industry is located in Java.
The imposition of anti-dumping duty is aimed at companies which dumped cheap goods. Another aim is to create fair competition in the domestic market. The imposition of anti-dumping duty on three types of filament yarn is expected to reduce imports, so that the country can maintain its balance of trade, especially in the manufacturing sector.
Currently, Indonesia is ranked 12th in the world in textile exports, with approximately 1.6 per cent of the world market share. Since 2008, due to the global economic downturn, the number of factories, exports and production declined, however, in 2011, there has been a gradual reversal of the trend.
The most popular export items from 2007-2011 were woven clothing, underwear and knitted or crocheted clothing which together made up nearly 60 per cent of the total value of textile exports over this period.