Indonesia’s textile and garment industry is greatly affected by rising freight costs

Kontan Jakarta reported on September 2 that the Indonesian textile and garment industry has been more affected by the increase in freight costs. Jemmy Kartiwa, general chairman of the Indonesian Textile Industry Association (API), revealed that freight costs have increased since the third quarter of last year, and the current increase in freight costs has reached its peak, 5-6 times higher than normal freight costs. Freight costs have increased, and Indonesia is geographically at a disadvantage compared to competing countries such as China, India, and Vietnam, which are closer to several export destinations such as the United States, Europe, and Latin America. Under normal circumstances, the freight cost from Indonesia to the United States is US$2,500/container. Due to the increase in tariffs, the current shipping cost has reached US$18,000/container. Competing countries such as India spend US$1,500/container under normal circumstances, but after the tariff increases, the expenditure is only US$7,500/container. Therefore, higher tariffs will have a greater impact on Indonesia. The Indonesian Ministry of Industry stated that the textile industry and textile products are still one of the pillar sectors of Indonesia’s national economy. The textile and clothing industry contributed 6.76% to the GDP of the non-oil and natural gas processing industry in 2020. The total export volume of the textile and clothing industry in 2020 reached US$10.62 billion; from January to June 2021, the textile and clothing industry exports were US$5.86 billion. .