WNAM REPORT: The Indonesian government has emphasized the need for the immediate completion of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) to protect the national textile industry’s market amid global geopolitical uncertainty.
Coordinating Minister for Economic Affairs Airlangga Hartarto said that the EU is the largest market for Indonesian textile products, accounting for around 30 percent of global demand for these products.
“The EU, which has a large market, accounts for around 30 percent of our global demand, followed by the US with around 15 percent,” he said at the Presidential Palace in Jakarta on Wednesday.
He referred to Vietnam, which has managed to increase its textile exports by 50 percent after completing a similar trade agreement with the EU.
Therefore, he added, the Indonesian government is pursuing the completion of IEU-CEPA negotiations to protect and improve its textile industry.
In addition to expanding the export market, Hartarto said, the government has also introduced domestic policies to enhance the competitiveness of the textile industry, especially medium and small enterprises (SMEs).
It is taking strategic steps to achieve this, including a machinery revitalization program, with regulations to be issued soon. The government has allocated an investment subsidy of Rp20 trillion (approximately US$1.2 billion) to support the modernization of production equipment.
“If the machines are not revitalized, competitiveness—both in terms of energy use and production—will decline,” Hartarto explained.
To support labor-intensive industries such as textiles, shoes, food and beverages, furniture, and leather, the government has also prepared an investment credit scheme with an 8-year tenor (duration) and a 5 percent interest subsidy.
With these measures, the government aims to revive the textile sector and create more jobs once the IEU-CEPA is implemented.
Indonesia is targeting the completion of the IEU-CEPA negotiations in the first half of this year. Nineteen rounds of negotiations have been conducted over the past nine years.
In general, the agreement has three main pillars: market access for trade in goods and services, investment and public procurement, and the harmonization of trade regulations, as well as cooperation and capacity building.
