Minister of Cooperatives and SMEs Suspects Predatory Pricing in Textile Industry, Calls for Protective Measures

KOMPAS.com – Minister of Cooperatives and SMEs (MenkopUKM) Teten Masduki suspects that there is a practice of predatory pricing or selling at a loss, especially for commodities from abroad which has caused a blow to the domestic textile industry.

Teten explained that goods from abroad come in and flood Indonesia at prices below domestic production which are considered unreasonable, then sold online, making domestic products unable to compete.

“I got a lot of input from discussions here regarding the large number of imported goods coming in, especially from China at very cheap prices,” said Teten in Bandung, quoted from Antara, Sunday (24/9/2023).

“Well, this cheap price could be what we call predatory pricing for selling online and then hitting offline traders and the effect is hitting the production sector as well,” he said again.

Also read: Jokowi and his Minister’s answer when asked to close the TikTok Shop

For your information only, predatory pricing is an illegal business practice that sets the price of a product too low to eliminate competition.

In simple language, sellers or producers slash prices, regardless of losses, in order to kill their competitors in the same market.

If one of the business actors carries out predatory pricing, what will happen is a price war. Where other sellers or manufacturers will also make massive price cuts.

At first glance, this price war will benefit consumers because they can get goods or services at low prices. However, sellers who are not strong enough to carry out continuous price wars, especially those who are small and lack capital, will experience bankruptcy.

Also read: Asked to Close TikTok Shop, This is the Minister of Communication and Information’s Response

Automatically competition will be reduced, even controlled by a handful of players. Which in the long term, will actually tend to control prices and ultimately harm consumers.

Teten’s steps

Teten himself said that his party had investigated allegations of predatory pricing of imported textile goods from China. The ministry will coordinate with other agencies related to the distribution of imported goods.

“So this is what I will talk about, indeed this has been coordinated with the Minister of State Secretary, I will report because this authority does not lie with me but with the Ministry of Trade and the Ministry of Finance,” said Teten.

“Including the issue of special basic prices, such as China, incoming goods from abroad cannot be lower than COGS, so if we implement this then this will protect domestic industry,” added Teten.

Also read: Teten: How can the Minister of Cooperatives Close TikTok

Teten emphasized that the lack of competitiveness of domestically produced goods is not a matter of quality, but is related to prices where imported goods have an inappropriate Cost of Goods Sold (HPP).

“So the HPP didn’t come in, in the end it couldn’t compete. Well, I got that information, and there are indeed many indications of imports of apparel and textiles like that. What we want to see is where the problem is, why are we being flooded with products from abroad which is very cheap,” he said.

Business actors, such as Dudi Gumilar, who owns a weaving factory in Solokan Jeruk, Bandung Regency, have expressed the hard hitting condition of the textile industry, who admitted that they had difficulty selling their products due to the flood of foreign goods.

“Our stock has accumulated until now we still have 1.5 million meters, production is still ongoing, we don’t know how long we can still produce,” said Dudi, who is Deputy Chair of the Majalaya Textile Community.

Also read: Jokowi regarding TikTok Shop: It should be social media, not economic media

The Chairman of the Bandung Convection Entrepreneurs Association (IPKB) Nandi Herdiaman said a similar thing, who said that the impact of this flood of imported goods.

Apart from hitting traders in the market, but also producers due to the lack of demand in the domestic market, he even said that many business actors had closed down.

“There are so many in West Java, the impact may be unemployment as the last few months have declined. We won’t be able to survive much longer, because of the flood of imports. With this review, hopefully Minister Teten can get the real facts,” he said.

Teten admitted that various inputs and facts from this review activity would be discussed at the central level, such as increasing security measures (safeguards) so that imported goods do not enter Indonesia easily and cheaply, as well as improving existing regulations.

Also read: Regarding Predatory Pricing, Minister of Communication and Information: I’ve asked TikTok

“So this is what I will talk about, indeed this has been coordinated with the Minister of State Secretary, I will report because this authority does not lie with me but with the Ministry of Trade and the Ministry of Finance,” said Teten.

“Including the issue of special basic prices, like China, incoming goods from abroad cannot be lower than COGS, so if we implement this then this will protect domestic industry,” added Teten.

Get selected news updates and breaking news every day from Kompas.com. Let’s join the Telegram Group “Kompas.com News Update”, by clicking the link https://t.me/kompascomupdate, then join. You must install the Telegram application first on your cellphone.

2023-09-24 12:46:00
#Teten #Sniffs #Chinese #Imported #Clothes #Accidentally #Sold #Cheaply #Online #Stores #Kompas.com