Import Substitution in Circular Economy Perspective: A Study on Textile And Apparel Industry

Abstract

The import substitution policy has not been effective in controlling imports of textile raw materials. This research aims to build a framework that connects the circular economy with the import substitution of textile raw materials. We carried out a synthesis based on literature studies and in-depth interviews with government representatives and the textile and apparel (TTA) industry. A circular economy can be an instrument for import substitution by producing recycled materials from waste from residues along the TTA value chain. Recycled products include fiber and yarn (secondary raw materials), which are mixed with primary raw materials to produce sheet cloth, which can be an import substitute. Two potential benefits can be achieved simultaneously, namely controlling imports because the demand for recycled materials can be met by domestic industry and export opportunities because of the positive trend in recycled material demand. The results of this research recommend collaboration between stakeholders who are members of the TTA circular value chain. This research contributes to policymakers and decision-makers, especially in terms of controlling imports and adopting a transition to a circular economy.