Indonesia will impose a tariff of 2.5 per cent to 18 per cent on imported textile products. The form of tariff will be like a pyramid, the smallest upstream industry at 2.5 per cent and the biggest downstream at 18 per cent. The aim is to protect the domestic textile industry from Chinese products, especially as a result of the trade war. In addition, the depreciation of the yuan has made Chinese products more competitive than local products since the price gets cheaper.

Indonesia fears a heavy influx of yarn, fabric and garment products from China. The US has imposed a 25 per cent import duty tariff for textile products from China. Meanwhile, the tariff imposed by Indonesia is around ten per cent to 15 per cent. With these tariff differences, there is an opportunity for China to shift its textile products to Southeast Asia, including Indonesia. This will lead to an excess supply of textiles and prices will fall and hit the manufacturing sector.

As it is the performance of the Indonesian textile industry sector has continued to decline in the last ten years. On an average, exports have risen only three per cent while imports have risen 12 per cent.