Indonesia has slapped safeguard duty, ranging between US$1.33 and $4.34 per piece, on its import of almost all apparel items from Bangladesh and other countries to protect the interests of its local industry, officials said.
The apparel products put under the safeguard duty coverage include top garments (casual), top garments (formal), bottom garments, suits, ensembles and dresses, outwear, babies' garments and clothing accessories, and headwear and neckwear.
Effective from November 12 last, the Southeast Asian nation has, however, excluded the developing-country members from the safeguard duty on headwear and neckwear if their exports contribute less than 3.0 per cent of the items to Indonesia.
The committee on safeguards of the World Trade Organisation (WTO) recently circulated a notification on the imposition of the safeguard measure for a three-year period by the Indonesian Ministry of Finance.
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.
Bangladeshi apparel manufacturers, however, do not see any major adverse impact of the measure since their export to Indonesia is very minimal and that the duty is equally applicable for all the competitors.
Indonesia on February 23 this year notified the findings of its safeguard investigation, portraying evidence and stating that the increased volume of imports have "caused a threat of serious injury" to its domestic apparel industry.
The notification also indicated that the investigating authority had proposed the government of Indonesia for imposition of safeguard measures on the importation of apparel items in the country.
After the notification was issued in February last, Bangladesh had appealed to Indonesia not to make Bangladesh's apparel items subject to their safeguard duty.
Later in March this year, a hearing of the Bangladesh's appeal was also held where the Bangladesh side placed its argument. Following the hearing, Bangladeshi officials were optimistic that Indonesia may differ in imposition of the safeguard measure.
Being requested by the Indonesia Textile Association against the import of apparels into the country, the Indonesian Safeguards Committee (KPPI) had initiated the investigation on imposition of a safeguard duty in September last year.
The committee also investigated Bangladesh's apparel exports between 2017 and 2019 to Indonesia as its local industry failed to compete with the imported goods.
In November last year, the Bangladesh Trade and Tariff Commission (BTTC) and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) had placed their arguments before the KPPI at a hearing on this issue.
In the hearing, Bangladesh raised objections on several aspects of Indonesia's safeguard investigation.
Contacted on Sunday, director general of WTO Cell Hafizur Rahman told the FE that Bangladesh's apparel export to Indonesia may go down as safeguard duty comes into effect.
"Indonesia's domestic apparel consumption will increase while imported ones will go down," he said.
President of Bangladesh Garment Manufacturers and Exporters Association Faruque Hassan told the FE that Indonesia is not a big market for apparel export as the country itself is a garment producer.
"Our export to Indonesia is very negligible," he said, adding that since every exporter will have to pay similar duty, the impact for Bangladesh will be 'almost nothing'.
In the fiscal year 2018-19, Bangladesh exported apparel products worth US$30 million to Indonesia, up from $20 million in FY 2017-18 and $14 million in FY 2016-17.