August 28, 2024
JAKARTA – The Industry Ministry is finalizing a proposal to relocate entry points of some imported goods from ports on Java Island to eastern Indonesia in a move to curb the entry of foreign goods that threaten the local manufacturing industry, including those illegally procured.
Those goods were textiles and textile products, finished clothing, ceramics, electronics, footwear, cosmetics and other textile goods. The new entry points proposed by the ministry include Sorong in West Papua, Bitung in North Sulawesi or Kupang in East Nusa Tenggara.
“The proposal is nearly complete. We plan to submit it to the President on Wednesday and request a limited meeting,” Industry Minister Agus Gumiwang Kartasasmita said on Monday, as quoted by Bisnis.com.
If implemented, the move would require importers to bear additional logistics costs to transport the goods from the new entry points in eastern Indonesia to Java and Sumatra, where the majority of consumer goods demand is concentrated.
However, Agus insisted that the government did not intend to impose restrictions. Instead, he defended the move claiming it was to create economic benefits for areas surrounding the new entry points, as well as the local shipping industries.
“We [are simply] relocating the entry points and the goods can still enter the country,” he stated.
Agus emphasized that the change in entry points would only affect consumer goods, not raw materials.
“Our focus is to complicate the entry of consumer goods into the country. However, for raw materials, we need to ease the process. This would help [the local] textile industry to grow again,” Agus added.
Read also: Manufacturing contraction a ‘warning’ sign for policymakers
Indonesian manufacturers have become pessimistic about the sector’s growth prospects as the purchasing managers’ index (PMI) slipped into contraction territory in July for the first time in more than two years. The headline index, a key gauge of manufacturing activity, fell to 49.3 points from 50.7 in June.
A reading below 50 indicates a decline in activity while values above that threshold signify expansion.
The Industry Ministry has blamed eased import requirements for causing a drop in optimism among local business players, which the Trade Ministry denied.
Read also: Import duties will protect ceramic producers, ministry insists, but prices could rise
Both ministries have since agreed to discuss the possibility of imposing high import duties on several import commodities, such as ceramics and textiles. However, no clear decision has been made yet.
Other efforts have also included forming a task force led by the Trade Ministry to curb the illegal entry of imported goods. However, weeks after it started working, the ministry was left puzzled over how it would handle the seized goods, as destroying them would require a hefty budget.
Regarding the proposal to move import entry points to eastern Indonesia, Minister Agus claimed that the Trade Ministry was on the same page.
“I think Trade Minister Zulkifli Hasan would share the same opinion, as the idea originally came from him,” Agus concluded.