The safeguard duty, slapped by Indonesia recently will not have much impact on the apparel export of Bangladesh, industry insiders hope.
They also said that Indonesia is not a big market for Bangladesh. So, their safeguard duty will not have much impact.
Moreover, it is a competitor of Bangladesh too.
However, it is also a promising market for Bangladeshi RMG items. Although Bangladesh exports less here, this will be threatened, they added.
Talking to Dhaka Tribune, Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters As
sociation (BGMEA) said that they don't think this will have a big impact on Bangladesh because the market size in Indonesia is very small for Bangladesh.
Moreover, it has given the same policy to other exporters, he added.
“Indonesia itself is a big garment manufacturer. So, this market has no potential, no chance of expanding in the future. Besides, their currency is very weak, which is why we are not thinking about it,” he added.
Shahidullah Azim, vice-president of the BGMEA echoed the president and said that Bangladesh is not worried about the safeguard duty of Indonesia.
“Indonesia is not a big market for our apparel items, rather they are our competitors in the global arena,” he added.
He also said that Bangladesh exports very little amount of apparel goods there and their new tariffs will not have a substantial impact on the exports of Bangladesh.
“However, we will urge the government to take necessary measures to resolve the disputes through diplomatic channels,” he added.
Recently, the committee on safeguards of the World Trade Organization (WTO) circulated a notification on the imposition of the safeguard duty for a three-year period by the Indonesian Ministry of Finance.
According to the circular, Indonesia has slapped safeguard duty, ranging between $1.33 and $4.34 per piece, on the import of almost all apparel items from Bangladesh and other countries to protect the interests of the local industry of Indonesia.
The rate of safeguard duty will go down every year. In the second year, the duty will be between $1.26 and $4.12 per piece while in the third year it will be between $1.20 and $3.91, said the circular.
Meanwhile, China, Singapore and Vietnam currently enjoy duty-free access to Indonesia, whereas Bangladesh has been facing a 25% tariff for apparel export.
BGMEA Director Mohiuddin Rubel said that Indonesia imposed this safeguard duty despite the fact that they could not prove a causal link between the surge of their apparel imports and domestic market injury.
“They made a one sided decision, Bangladesh may win if they go for dispute settlement through WTO,” he added.
He also said that Indonesia is also not a significant market for Bangladesh as it exports only around $30 million and the total import of Indonesia from the world is around $630 million.
“So, this is not a big loss for us in terms of market, but Bangladesh should also send a strong signal against such measures,” he added.
According to the Export Promotion Bureau, Bangladesh exported apparel goods and apparel accessories worth $34 million to Indonesia in FY21, which was around $29 million in FY20, $30 million in FY19, $20 million in FY18, and $13.8 million in FY17.
This data showed that the export of apparel items to Indonesia experienced a rising trend over the last five years.
Moreover, Bangladesh exported the textile items to Indonesia worth around $7 million in FY21 and around $3 million in FY20, said the EPB data.
Bangladesh imported over $1.94 billion worth of goods from the Southeast Asian country where the garment items were worth of $187 million, including $133 million of fibres.
The safeguard duties are state levies that can be imposed on imported goods in case of an absolute or relative surge in the import of goods detrimental to similar domestic products or which could cause heavy losses to the domestic industry.
Indonesian Safeguards Committee (KPPI) introduced the safeguard measures following an investigation on Bangladesh's apparel exports to Indonesia for the 2017-2019 period.
The BGMEA and the Bangladesh Trade and Tariff Commission shared their arguments, stance, and observations on the matter last year.
A hearing took place in November last year on the matter. Effective from November 12 of last year, Indonesia has, however, excluded the developing-countries from the safeguard duty on headwear and neckwear if their exports contribute less than 3% of the items to Indonesia.
However, the World Federation of the Sporting Goods Industry, a Switzerland-based organization, alleged Indonesia saying that it had violated WTO rules to impose the safeguard measures.