Jakarta. Imported secondhand clothing is squeezing the country’s textile and garment industry while depriving the state of tax revenue, a government official told lawmakers in a hearing on Wednesday.

Deputy Minister of Industry Faisol Reza said used clothing accounted for an average of nearly half of total apparel imports between 2020 and 2025, compared with officially imported new garments. Most of these secondhand items enter the country illegally, bypassing customs duties and taxes, he told lawmakers on Wednesday.

“Beyond the loss of state revenue, these products hit domestic industry directly because they are sold at prices far below locally made goods, which are subject to value-added tax and income tax,” Faisol said during a hearing with the House of Representatives’ Commission VI.

Indonesia has banned imports of used clothing under Trade Ministry Regulation No. 40/2022, reinforcing earlier prohibitions issued in 2015 and 2021. Despite the restrictions, smuggling remains widespread, authorities say.

Faisol said illegal imports are not subject to import duties, additional levies, value-added tax or income tax, giving them a significant price advantage over domestic products. As a result, locally manufactured apparel struggles to compete, even in the domestic market.

The pressure on the industry has already translated into job losses. Data from the Confederation of Indonesian Trade Unions (KSPN) show that more than 126,000 textile and garment workers have been laid off, while the Manpower Ministry recorded 88,519 layoffs in the sector between January and November 2025.

The textile and textile products (TPT) industry remains a key pillar of Indonesia’s manufacturing sector. Faisol said textile exports reached $10.97 billion (Rp 183.97 trillion) as of November 2025, accounting for about 5.33% of national exports. The industry employs roughly 4 million workers — nearly 20% of Indonesia’s manufacturing workforce — and supplies around 70% of domestic clothing demand.

Official data, however, suggest that used clothing continues to enter the country through informal channels. The Central Statistics Agency (BPS) recorded 3,865 tons of secondhand clothing imports in 2024, which the Directorate General of Customs and Excise attributed to passengers’ personal belongings.

Trade discrepancies point to a much larger inflow. Data from Trade Map show a significant gap between Indonesia’s import figures and export data from its trading partners. From Malaysia alone, shipments of used clothing to Indonesia in 2024 reached an estimated 24,000 tons, according to partner-country records.

Faisol said illegally imported secondhand clothing is sold at prices between 10.4 and 19.9 times cheaper than domestic products. The wide range of items, many of them branded, further undermines local manufacturers’ ability to compete.

Despite these pressures, the government sees strong potential in the domestic apparel market. BPS data show that Indonesians spend an average of about Rp35,000 ($2) per capita per month on clothing, footwear, and headwear.

With Indonesia’s population estimated at 281.6 million, total monthly spending on clothing-related items reaches around Rp10 trillion, equivalent to Rp119.8 trillion annually.

“These figures show the domestic market offers enormous potential that can continue to be optimized to strengthen national industry, particularly the textile and garment sector,” Faisol said.

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