New Delhi, Jan 26: Indonesia’s micro, small and medium enterprises are coming under growing pressure as cheap imports from China flood domestic markets, raising concerns about the country’s long-term industrial health and economic independence, a report has said.
Latest trade data shows that China now accounts for more than one-third of Indonesia’s total imports — highlighting a deepening imbalance in trade relations.
In January 2025 alone, imports from China touched around $6.37 billion, making up about 35.5 per cent of Indonesia’s overall imports, as per a report by Financial Post.
Across the country, from traditional markets in Surabaya to online stores in Jakarta, many MSMEs are shutting down production and shifting to reselling Chinese-made goods.
These enterprises employ nearly 90 to 95 per cent of Indonesia’s workforce, and their move away from manufacturing is seen as a warning sign for the wider economy.
Indonesia’s Minister for MSMEs, Maman Abdurrahman, has publicly cautioned that a growing number of entrepreneurs are stopping local production because they cannot compete with the low prices of Chinese imports.
Instead, many are choosing to survive by importing finished goods, a trend that is weakening Indonesia’s domestic supply chains.
China’s manufacturing advantage is built on decades of state-led industrial planning, large-scale factories and tightly linked supply networks.
This allows Chinese producers to make goods faster and cheaper than most Indonesian firms, especially small businesses that struggle with outdated machinery and limited access to finance.
The problem is made worse by weak enforcement of trade and regulatory rules. Many imported goods from China reportedly enter Indonesia without proper labelling, certification or compliance with halal and quality standards.
Local producers, meanwhile, must meet strict regulations that raise costs and slow down production.
In some cases, Chinese textiles and garments are believed to enter the country illegally and are later rebranded to appear locally made.
Indonesia has tried to impose anti-dumping duties on some products, but enforcement has been inconsistent.
At the same time, China has imposed anti-dumping measures on Indonesian steel exports, reinforcing perceptions of unequal treatment in trade practices.
The impact is being felt most strongly in the textile sector, once a major pillar of Indonesia’s manufacturing economy.
Factories are closing, jobs are being lost, and traditional industries such as batik and handloom weaving are struggling to compete with mass-produced fabrics from China.
Beyond economic losses, there are growing fears that Indonesia’s cultural industries could be pushed aside by cheaper imports.
–IANS