Indonesia has introduced safeguard duties on imported cotton woven fabrics to protect its domestic textile industry. The move follows evidence of serious losses faced by local producers due to a surge in imports. The policy is designed to give the industry breathing space to restructure and strengthen its competitiveness.
Key Facts & Background
- Policy Introduction:
- Safeguard duties (BMTP) imposed on cotton woven fabric imports.
- Effective for three years, from 10 January 2026 to 9 January 2029.
- Formalized under Minister of Finance Regulation (PMK) No. 98/2025, enacted on 31 December 2025.
- Scope of Regulation:
- Covers 16 Harmonized System (HS) codes under BTKI 2022, including 5208.21.00, 5208.22.00, 5209.21.00, 5210.32.00, and others.
- Duty Rates:
- Year 1 (2026–2027): Rp3,000–3,300 per meter.
- Year 2 (2027–2028): Rp2,800–3,100 per meter.
- Year 3 (2028–2029): Rp2,600–2,900 per meter.
- Investigation Findings:
- Conducted by Komite Pengamanan Perdagangan Indonesia (KPPI) based on a request from the Indonesian Textile Association (API).
- Indicators of harm included declining production, domestic sales, productivity, capacity utilization, employment, and financial performance.
- Industry Response:
- API welcomed the safeguard duties as necessary to balance the market and provide adjustment space.
- Chairman Andrew Purnama emphasized the need for periodic evaluation based on trade data and market dynamics.
Strategic Insights
The safeguard duties on cotton woven fabric imports highlight Indonesia’s effort to shield its textile industry from external pressures while allowing time for structural adjustments. By imposing duties over a phased three-year period, the government aims to stabilize domestic producers, protect jobs, and ensure that the sector remains viable in the face of rising import competition. The measure reflects a broader pattern of trade defense instruments being used to maintain industrial resilience in strategic sectors.
At the same time, the policy underscores the delicate balance between protecting local industries and maintaining open trade. While safeguard duties provide immediate relief, their long-term effectiveness will depend on how well domestic producers adapt, improve efficiency, and strengthen competitiveness. Periodic evaluations, as suggested by API, will be crucial to ensure that the duties achieve their intended purpose without distorting the market. The decision signals Indonesia’s pragmatic approach to trade policy, combining protection with accountability to safeguard both industry and consumers.