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Indonesia'S Textiles And Apparel: The Challenges Ahead

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  • William James
  • David Ray
  • Peter Minor

Abstract

International rules governing textiles and apparel trade are undergoing transformation. The Multi-Fibre Arrangement (MFA) is being phased out, and as of January 2005 textiles and apparel trade will be conducted under World Trade Organization (WTO) rules. For Indonesia, this presents challenges and opportunities. The global trading system is increasingly seeing the introduction of preferential trade agreements (PTAs) that liberalise trade among members but discriminate against nonmembers. Major markets are negotiating new PTAs that divert trade away from low-cost non-member producers such as Indonesia. China's entry into the WTO allows producers there to take advantage of liberalised quotas and the integration of textile and apparel products into the tariff-based trade system as of 2002. With rising domestic production costs, increased local government interventions and poor tax administration, Indonesian producers face a 'double squeeze'. This paper outlines the key challenges confronting the sector and makes recommendations for sustaining exports in coming years.

Suggested Citation

  • William James & David Ray & Peter Minor, 2003. "Indonesia'S Textiles And Apparel: The Challenges Ahead," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 39(1), pages 93-103.
    • Handle: RePEc:taf:bindes:v:39:y:2003:i:1:p:93-103
    DOI: 10.1080/00074910302005
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    Cited by:

    1. Mausumi Kar, 2012. "National and Global Aspects of India’s Textiles and Apparel Industry and Trade: An Overview," South Asian Journal of Macroeconomics and Public Finance, , vol. 1(1), pages 81-133, June.
    2. Coxhead, Ian, 2007. "A New Resource Curse? Impacts of China's Boom on Comparative Advantage and Resource Dependence in Southeast Asia," World Development, Elsevier, vol. 35(7), pages 1099-1119, July.
    3. Vanzetti, David & McGuire, Greg & Prabowo, 2004. "Trade Policy at the Crossroads - The Indonesian Story," Conference papers 331197, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Hossain, Akhand Akhtar, 2009. "Structural change in the export demand function for Indonesia: Estimation, analysis and policy implications," Journal of Policy Modeling, Elsevier, vol. 31(2), pages 260-271.
    5. J. Thomas Lindblad, 2007. "Indonesia and China Today," Journal of Developing Societies, , vol. 23(3), pages 369-392, July.
    6. Permani Risti, 2011. "The Impacts of Trade Liberalisation and Technological Change on GDP Growth in Indonesia: A Meta Regression Analysis," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-30, December.
    7. Coxhead, Ian, 2004. "International Trade and the Natural Resource 'Curse' in Southeast Asia: Does China's Growth Threaten Regional Development," Staff Paper Series 480, University of Wisconsin, Agricultural and Applied Economics.
    8. James, William E. & Ramstetter, Eric D., 2008. "Trade, foreign firms and economic policy in Indonesian and Thai manufacturing," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 413-424.

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