The Financial Express

Jakarta imposes safeguard duty on Bangladesh RMG

| Updated: March 03, 2021 14:38:08

Jakarta imposes safeguard duty on Bangladesh RMG

Indonesia has slapped a safeguard duty, ranging between US$0.44 and $11.29 per piece, on export of a number of apparel items to the country from Bangladesh, officials said.

The products include top garments (casual), top garments (formal), bottom garments, suits, ensembles and dresses, outwear, babies' garments and clothing accessories, and headwear and neckwear.

The committee on safeguards of the World Trade Organisation (WTO) issued notification on imposition of the measure on Tuesday. The safeguard duty will be implemented in three stages.

The duty is imposed after conducting investigation on Bangladesh's apparel export to Indonesia between 2017 and 2019, as its local industry failed to compete with the imported goods.

As a member of the WTO, Bangladesh can appeal against imposition of the safeguard duty by February 28.

However, the stakeholders concerned decried the new measure, saying that the safeguard measure was imposed 'unilaterally', and it would affect Bangladesh's apparel export to Indonesia.

Alongside Bangladesh, the export of apparel items from China, Vietnam and Singapore are also subject to the safeguard duty now.

However, the products of these three countries have duty-free access to Indonesia, while Bangladesh's apparel goods, under HS chapter 61 and 62, are subject to up to 25 per cent duty there.

In last November, the Bangladesh Trade and Tariff Commission (BTTC) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) placed their arguments before the Indonesian Safeguards Committee (KPPI) in a hearing on this issue.

In the hearing, Bangladesh raised objections on several aspects of Indonesia's safeguard investigation.

The representatives of the country argued that although there was a surge in Bangladeshi clothing exports to Indonesian market, its rate of growth actually declined in the latest year.

Bangladesh also argued that the causal link between surge in import and threat to injury was not established.

The KPPI had initiated the investigation on imposition of safeguard duty against import of apparels to the country in last September, being requested by the Indonesia Textile Association.

In fiscal year (FY) 2018-19, Bangladesh exported apparel items worth $30 million to Indonesia, up from $20 million in FY 2017-18 and $14 million in FY 2016-17.

BGMEA President Dr Rubana Huq, in a press statement on Wednesday, said Bangladesh's apparel export is much lower than that of importing textile articles from Indonesia.

In FY 2018-19, Bangladesh imported textile articles worth $187 million from Indonesia, which included fibres worth $132.59 million. On the other hand, Bangladesh's export of garment was $30 million then.

She also said Bangladesh has 4.1 million workers, and at least five people are being supported by each worker. It means almost 20 million people are directly dependent on the ready-made garment (RMG) industry.

"Considering this critical issue of livelihood, the duties imposed on Bangladesh's export to Indonesia, and the favourable balance of trade that Indonesia already has with Bangladesh, the safeguard measure should not be applicable by any means," added Ms Huq.

Mohammad Hatem, first vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said imposition of any additional duty on any export comes as a burden for the industry.

"Though Bangladesh's apparel export to Indonesia is not very high, the safeguard duty must have an impact on us," he opined.

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