Taiwan-based textile companies Eclat Textile Co (儒鴻) and Makalot Industrial Co (聚陽), which produce more than 80 percent of their goods in Vietnam and Indonesia, said they were somewhat relieved by the latest tariff rates imposed by the US on the two Southeast Asian countries.
On Tuesday, the administration of US President Donald Trump announced it had reached a deal to impose 19 percent tariffs on Indonesia-made products, down from the 32 percent it threatened in early April.
That came after the US reached an agreement with Vietnam early this month to impose a 20 percent tariff on goods from that country, down from 46 percent.
Photo: CNA
Eclat and Makalot said that tariffs in the 19-to-20 percent range were acceptable and that the increased costs were not game changers.
Tiffany Lin (林芬如), Eclat’s vice president of finance and accounting, told reporters that the tariff issues were evolving in a “positive” direction and that Eclat would negotiate pricing with its clients based on the new tariffs.
According to the company, which is believed to produce garments for international brands such as Nike, Under Armour and Lululemon Athletica, Vietnam accounts for up to 65 percent of its total production and Indonesia for 25 percent.
Photo: CNA
There had been speculation that Eclat was putting off new investments in Indonesia due to the very high tariff announced originally, but Lin said that Eclat’s overseas investments were proceeding as planned and were necessary for its expansion.
At the end of last month, the company announced that it would inject US$41 million in a rights issue proposed by its Indonesian subsidiary Eclat Textile International, paving the way for construction of a third facility in Indonesia.
Meanwhile, Makalot gets 42 percent of its total production from Indonesia and 38 percent from Vietnam, company spokesman Henry Lin (林恆宇) said.
“With the two countries striking a deal with the United States, worries in my heart have been reduced by half,” Lin Heng-yu said.
Makalot would wait for the outcome of tariff negotiations with other US trading partners to be finalized before the company discusses with its clients how to share the financial burden of the tariff hikes, he said.
Outside the textile industry, Teco Electric & Machinery Co (東元), one of Taiwan’s leading electromechanical brands, also hailed the tariff arrangement for Indonesia, where the company produces power transformers.
Demand for power transformers from the US has remained solid and the lower tariff rate for Indonesia would make products rolled out by its Indonesia facility more competitive in the US market, Teco said.
The cost structure of its transformer facility in Indonesia is lower than that of counterparts in Taiwan, Japan and South Korea, it said.
In late September last year, Teco acquired a 57.2 percent stake in Taiwan-based power transformer maker Shenchang Electric Co (伸昌電機).
After the acquisition, the firm has set up a partnership with Shenchang’s Indonesian affiliate PT Sintra to expand its product portfolio in the Southeast Asian country with an eye toward North America and Taiwan, Teco said.
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