Jakarta, May 30 (Antara) - The Indonesian government must help textile
and footwear industries prepare themselves so that their products will
be able to compete in the global market and in the face of the ASEAN
Economic Community (AEC) in 2015.
Indonesia's
textile and textile product as well footwear industries still face
challenges in the face of free trade in the global market, including a
challenge to renovate their production tools. Most of their production
tools are dominated by old machines of up to 20 years old.
Currently,
a relatively high amount of machinery and components that are used to
produce textiles in Indonesia are imported. The ministry of Industry
stated that of the 2,900 textile companies that are active in Indonesia,
more than 500 are dependent on foreign materials.
The
ministry wants to tackle this issue as it hurts the industry's
competitiveness. For that reason, the government has provided a tax
holiday for investments in the country's textile producing machinery and
equipment industry, according to the indonesia-investments.com online
media last month.
"The
advent of the world trade globalization poses a challenge to
Indonesia's textile and textile product as well as footwear industries.
They are challenged to increase their competitive edge and to optimize
their efficiency in the global market," Panggah Susanto, the director
general for manufacturing industry of the Ministry of Industry, said on
Thursday.
Panggah said industries must take steps to face these conditions. Now,
many countries had concluded agreements, both bilaterally and
multilaterally, which exempted their partners' products from import
duties.
"Free Trade Agreement (FTA) enables products from partner countries to
enter the domestic market easily," the director general said.
In this case, the ministry of industry has asked the Indonesian Textile
Association (API) to prepare a road map together for expansion.
Indonesia's textile and textile products exports grow about five to six
percent annually. The country is inside the top ten of largest textile
producing countries but needs to increase productivity as well as
competitiveness ahead of the Asean Economic Community (AEC) that will be
established in late 2015.
The AEC will integrate the ASEAN region into a single market and
production base and includes the free flow of capital and professionals
within the region.
In that context, Indonesia needs to boost many of its industries
(including the textile industry) in order to remain or become a supplier
instead of a consumer of the region's products.
After all, about 1.80 percent of global demand for textiles and textile
products is met by Indonesian textile exports according to Indonesia's
Ministry of Industry.
The value of the country's textile exports is estimated at US$12.6
billion. However - and in line with Indonesia's economic expansion - the
ministry targets to meet four to five percent of overseas textile
demand.
"It is the interest of the government to maintain and support the
development of the potentials of the national textile and footwear
industries One of its step to support it is providing them with fiscal
incentive," Panggah Susanto, said.
The fiscal incentive is also expected to increase and attract
investment, including new investment that could reinforce the structure
of industries.
It is also expected to encourage the use of new and more efficient technology which is environment-friendly.
Therefore, the government also has launched new textile machinery and
tool restructuring program. The program aims to rejuvenate textile
industries' tools and machines which are already over 20 years old.
The old machines consume a big volume of energy and cause the quality
of product to be inferior. "The problem is that competition is
increasingly tougher with the emergence of competitor countries which
use latest technology," Panggah said.
Moreover, foreign products have been flooding the Indonesian market.
Textile and footwear product, for example, have been flowing to the
Indonesian market with cheaper prices.
"The Chinese goods are
flooding the Indonesian market, which are imported both legally and
illegally," the director general said.
Virtually, according to Indonesian ambassador to China Imron
Cotan, many Chinese businessmen are interested to invest in Indonesia's
manufacturing industries especially textile industry,
"Many
Chinese businessmen wish to relocate their industries and develop their
investments in Indonesia such as in the textile sector in view of the
country's and region's potentials," he said presenting China's economic
growth at an Indonesia-China Association meeting recently.
Many Chinese investors have so far invested in the mining sector.
According to the Investment Coordinating Board in 2007-2012 investment
in the sector reached US$153.99 billion mostly from China.
Cotan said Chinese investors are shifting to manufacturing industries
especially the textile industry for production cost and competitiveness.
He said the Chinese businessmen saw the labor wage in the country was
more competitive than in China and that was one of the potentials for
investment.
"Indonesia meanwhile also has up to 100 million middle-class members
while its market reaches 250 million population," he added.
The potential of Indonesia in textile industry is indicated by PT Sri
Rejeki Isman (Sritex) plan to launch an initial public offering next
month. It will float 5.6 billion shares or 30.12 percent of its shares
in the IPO at a price of Rp230 - Rp385 each.
"Most or 87 percent of the fund from the share sale will be used to
expand its spinning division and remaining 13 percent for the
expansion of its garment making division," its President Director Iwan
Setiawan said.
The company will increase its spindles with 287,000 units and expand
its garment production capacity by 8 million pieces per year, Iwan
said.
Indonesia's most important textile export products are garments, fabric
and yarn. Together these products account for over 90 percent of the
country's textile exports. Important export destination countries are
the United States, Japan, Germany and Turkey.
Textile and textile product industry and footwear industry are major
contributors to sustaining the country's manufacturing sector. The
textile and footwear exports were valued at US$12.46 billion last year.
Apart from major contributor in export earning the two industries are
labor intensive providing large jobs, Director General Panggah said.
He said the country's footwear industry provide 1.8 percent of the
world's footwear requirement. He said 1.5 million jobs are provided
for Indonesian workers by textile industry and 700,000 jobs by
footwear industry.***3***
(T.A014/H-YH)
(T.SYS/A/A. Abdussalam/A/Yosep) 30-05-2013 18:49 |
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