A tugboat tows a cargo barge on May 20, 2024 at Tanjung Priok port in North Jakarta. - Photo: Antara file
JAKARTA: Domestic retailers have expressed opposition to importing certain goods through ports in eastern Indonesia rather than on Java, a plan the government says is aimed at curbing shipments of foreign-made goods that threaten local industries.
The proposed change in the geographical region where freight is shipped would affect imports of textile, apparel, ceramics, electronics, footwear, cosmetics and related products.
The Indonesia Retail and Tenant Association (Hippindo) said that while it supported the government’s goal of promoting nationwide regional development, changing the destination zone might not be the most effective solution to clamp down on illegal imports.
“Changing [the destination zone] could place a burden on both the retail and manufacturing industries,” Hippindo chairman Budihardjo Iduansjah said in a statement on Thursday (Sept 5).
Budihardjo said some potential challenges posed by the proposed policy included higher operating costs, including for transportation and distribution, which could in turn drive up consumer prices due to the less developed infrastructure in eastern Indonesia.
“If the cost of goods continues to rise due to elevated logistics costs, consumer purchasing power will decline and domestic spending targets will be hard to meet,” he said.
Instead of changing the shipping region from Java to eastern Indonesia, Budihardjo suggested stronger oversight and enforcement at all ports of entry as well as enhanced collaboration with relevant agencies to crack down on illegal importers.
Hippindo also urged the government to ramp up domestic manufacturing, especially of goods at current outputs insufficient to meet local demand.
Budihardjo further called on the government to facilitate local manufacturing: “Besides [altering the shipping region for foreign-made goods], there is a need to boost supply from domestic factories.
If necessary, partnerships with foreign entities could be established, but with the stipulation that the goods produced in Indonesia must be sold domestically, not only for export.”
The Industry Ministry is currently finalising its proposal to change the destination zone for consumer goods to the eastern regions, including Bitung in North Sulawesi, Kupang in East Nusa Tenggara and Sorong in West Papua.
If enacted, the new policy would force importers to bear additional logistics costs to transport the goods from ports of entry in eastern Indonesia to Java and Sumatra, where the majority of consumer goods are sold to customers.
Industry Minister Agus Gumiwang Kartasasmita defended the plan, saying the move was not intended to restrict imports but to boost the local economies and freight industries of eastern shipping regions.
Agus also underlined that the proposed change affect only consumer goods and not raw materials, adding that the ministry would ease the procurement process for raw materials to help revive the ailing textile industry toward growth.
The proposal has the support of Trade Minister Zulkifli Hasan and Cooperatives and Small and Medium Enterprises (SMEs) Minister Teten Masduki.
Indonesian manufacturers have become pessimistic about the sector’s growth prospects, as the purchasing managers’ index (PMI) in August remained in contraction territory for the second consecutive month, driven by dwindling sales.
The decline has forced some companies to downsize their workforce, even as they hold out hope for better conditions in the coming year. - The Jakarta Post/ANN
