General

Recently, Shopee issued a notice:

Dear seller:

I am sorry to inform you temporarily that due to Indonesia's logistics restrictions, shoes, clothing, textiles and luggage related products on the Indonesian site SLS channel will not be displayed and sold from now on.

For products that have been listed, the platform will delete them uniformly and no penalty will be issued. In addition, sellers will not be able to upload related products from the background.

The Indonesian government continues to tighten related policies

The Indonesian government's actions against cross-border e-commerce have never stopped.

At the beginning of 2020, the tax policy of Indonesian customs for imported goods was adjusted, and the threshold dropped from US$75 to US$3.

On March 6 this year, the President of Indonesia called on the Indonesian people to love "domestic products" and boycott "foreign products", and said that they would take measures to deal with it.

On March 18, Indonesia's third largest e-commerce platform Bukalapak announced that it would stop cross-border investment promotion.

Due to policy requirements, on March 22, Shopee announced that the Indonesian site banned the sale of Muslim-related clothing, no less than 30,000 rupiah, and required BPOM certification for food, medicine, and cosmetics.

This series of policies makes people wonder why the Indonesian government has repeatedly started with cross-border products such as shoes and clothes?

The current state of Indonesia's apparel industry

Textiles and clothing have always been Indonesia's important export products!

Statistics show that in 2017, Indonesia’s exports of this industry increased by 6% year-on-year, from US$11.8 billion in 2016 to US$12.4 billion. Its trade balance increased by 1.7% from US$3.67 billion in 2016 to US$3.73 billion in 2017. Under the influence of this, the number of employees in Indonesia's textile and clothing industry suddenly increased to 1516,000 (in 2019, this figure was 3.75 million, accounting for 3.1% of the national labor force).

Due to the growth of exports and domestic demand, this upward trend has continued to grow, especially during the annual Eid al-Fitr holiday, when sales have increased significantly.

Faced with such an industry that can not only generate revenue, but also solve the employment problem, but also attract investment, the Indonesian government announced that it will be a key project to promote economic growth by 2030.

Despite various positive indicators, Indonesia’s apparel and textile industries are still hampered by external and internal issues.

The internal issues are as follows:

1. Indonesia's natural gas and electricity prices are still one of the highest among textile producing countries, which greatly reduces the competitiveness of the industry.

2. The annual increase in labor costs has further exacerbated this problem. In the past few years, labor wages in Indonesia, especially in West Java and Jakarta, have been greatly increased.

3. Continue to use low-efficiency aging machinery and equipment, which is hard to return. Currently, 30% of Indonesia's textile factories use equipment that has been in use for more than 25 years.

The external issues are as follows:

1. The development of globalization has caused a large influx of foreign textiles, which puts pressure on Indonesian textile manufacturers. Especially in countries such as Vietnam, Bangladesh and Cambodia.

In the past few years, the export growth of Vietnam, Bangladesh and Cambodia has been higher than that of Indonesia.

Vietnam has benefited from close ties with Europe and the United States. The country imposes a 0% import tax on textiles in these two markets, while Indonesia imposes a 5%-20% import tax.

2. In addition to the 2020 epidemic, the blockade of the epidemic has caused heavy demand in Indonesia and abroad, a large number of workers are unemployed, and the demand for textile production and cotton imports has shrunk sharply. It is reported that in March-June 2020, the operating rate of Indonesian factories was only 50%, which was far lower than the 70-80% in the same period of the previous year.

Indonesia protects and develops local businesses

Based on the above analysis, it can be seen that the Indonesian government's policy is mainly to protect and develop local businesses.

Due to the development of e-commerce and the pandemic, the activity of selling goods through e-commerce has increased, and many foreign goods have entered Indonesia.

The Indonesian government has formulated corresponding regulations, for example, a new minimum policy to prevent the entry of foreign goods.

At present, what sellers can do is to understand the new regulations and rules for the sale of goods released by Shopee this time, make relevant business adjustments, and minimize losses as much as possible; second, follow the development of this matter at any time and follow the platform announcements for recovery. After sales, sales can be carried out in time.