Regulation Update
The Government To Impose Safeguard Duty on Import of Carpet Products

Wednesday, 10 February 2021

The Government To Impose Safeguard Duty on Import of Carpet Products

JAKARTA. Imports of carpets and other textile floor covering will be subject to safeguard measure import duty (BMTP) from 17 February 2021 for the next three years.

The imposition of this additional import duty is the result of an investigation conducted by the Indonesian Trade Safeguard Committee (KPPI).

According to the results of the investigation, KPPI concluded that the government should protect domestic industries that are threatened by the surge in imports of these products.

Based on the feedback from KPPI, the government then issued Minister of Finance Regulation (PMK) Number 10/PMK.010/2021.

In the regulation, the government set a tiered tariff on import duties tariff for three years. In the first year, or 2021, the applicable tariff is IDR 85,679 per square meter.

Meanwhile, in the second year, the amount of safeguard measure import duty is IDR 81,763 per square meter. In the third year, safeguard duty imposed amounted to IDR 78,027 per square meter.

Exception

Not all countries are subject to this safeguard measure import duty. In this regulation, the government stipulates that 123 countries are exempted from the imposition of safeguard measure import duty.

This exception is given because they are developing countries that is a member of the World Trade Organization (WTO) whose market share is not more than 3%.

This exemption is given because these countries are developing countries that are members of the World Trade Organization (WTO) whose market share is not more than 3%.

In order to avoid the obligation of the import duty payment, imports of carpets and other textile floor covering from the exempted countries must be accompanied by a Certificate of Origin.

The Impact of Trade War

In the KPPI investigation report, it is known that the number of imports of carpet products and other textile floor covering in the period between 2017 and 2019 has jumped 25.23% to 13.7 million square meters.

These imports mostly came from China (63.43%) and India (19.16%). Several other countries that were included in the list of the top five importers of carpet and other textile floor covering were South Korea with 4.38% and Japan 3.71%.

On the other hand, national production grew by minus 2.03%.

This investigation also shows that one of the causes of soaring imports of these products is the trade war between China and the United States (US).

This is shown by the comparative data on imports of these products between the US and Indonesia from China. During 2017 to 2019 period, imports from China to the US grew by minus 8.36%.

While Indonesia's imports from China in the same period grew by 40.83%.


 



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