Layoff worries mount as Indonesia sees flood of illegal imports

Smuggled goods compete unfairly with locally made products, economists say

- Linda Yulisman

For many shoppers, the prices are hard to resist. At a small shopping centre in South Jakarta, one-piece sleepwear is sold for as low as 25,000 rupiah (S$2) each, while a two-piece set is 35,000 rupiah.

Such cheap clothes with no labels, or with labels but in Chinese, can be found easily in Jakarta. Consumers told The Straits Times they buy the clothes because of the quality and low price.

“The price gap (between local and imported products) is not much, but the quality matters. The imported products are better than the locally made ones,” said 42-year-old Ms Inggrid, who goes by one name. “I don’t mind buying imported products.”

But these products do not comply with Indonesian rules, meaning they may be illegal imports, according to local business players. For example, some imported pieces of clothing do not have labels in Indonesian that contain details such as place of production and care instructions.

Economists said the imports are also detrimental to South-east Asia’s largest economy, as they compete unfairly with locally made products.

This could reduce sales by domestic manufacturers, leading to factory layoffs and even closures, while also costing the government tax revenue.

In 2023, the Customs and excise office confiscated illegal goods worth 670 billion rupiah at illegal ports in eastern Sumatra, preventing the loss of 500 billion rupiah in tax revenue.

Illegal ports are unguarded points of entry used to smuggle goods. There are more than 1,000 illegal ports in Indonesia, of which 500 are in eastern Sumatra, according to the Customs and excise office.

Mr Bhima Yudhistira, executive director of Jakarta-based Centre of Economic and Law Studies, said the influx of illegally imported products in recent years is already “alarming” as it poses a threat to the Indonesian manufacturing industry, and should serve as a warning to the authorities.