RI NEEDS TO EXPAND MARKET FOR HANDICRAFT PRODUCT

By Andi Abdussalam

Jakarta, July 21 (ANTARA) - Indonesia has planned to expand its export markets in a bid to leverage a rising trend in the production of local handicrafts and in order to focus on exporting to markets other than the United States and the European Union.          "We need a breakthrough to increase exports by expanding our markets to the members of ASEAN and Asia such as China and India," said Ambar Tjahyono, chairman of the Indonesian Furniture and Handicraft Industry Association (Asmindo) on Friday.          Asmindo, which has set a 10 percent export increase at US$2 billion this year, needs to expand its exports to Asia and ASEAN to overcome gloomy markets in the United States and Europe that are still experiencing economic turmoil.         Indonesia's furniture exports to the United States and Europe accounted for 25 percent and 35 percent of the total exports respectively.  Ambar had previously said that Indonesia should avoid exporting to a number of countries in the midst of the economic crisis because it could disadvantage Indonesian businesses.          He said that Indonesia should, thus reorient its outlook on newer market destinations.          "We are targeting 15 provinces in China for our furniture and handicraft products at present," he claimed.           The volumes of Asmindo exports to a number of ASEAN countries in 2011 stood at US$77.328 million, the biggest of which were contributed by exports to Malaysia, Singapore and Vietnam.          Last year, Indonesia's handicraft exports (excluding furniture) increased by 8 percent to US$800 million. "Indonesia's handicraft exports in 2011 rose by 8 percent to US$800 million when compared to the numbers seen in 2010," said Anshari Bukhari, the secretary general of the Ministry of Industry meanwhile.     In a step towards developing the industry¿s potential, the government has given a priority to the development of labor intensive handicraft businesses, most of which are cottage industries that significantly contribute to foreign exchange of the country.          Home industry is the prime driver of the country's regional economies and plays a big role in creating new entrepreneurs, absorbing new workers and contributing to the Gross Domestic Products (GDP), particularly in the creative economic sector.          "Cottage industry is successful because it is able to increase its own production capacity. Therefore, Indonesia has the big potential to develop its home industry. After all, it is rich in local culture and heritage which will enable it to produce cultural handicraft products," added Director General Anshari.          In order to develop this creative industrial sector in a globalized world, the ministry of industry seeks to cooperate and establish a strategic alliance with industrial players to revitalize and increase the capacity of the creative industry while creating new entrepreneurs.          "The ability to be creative by creating good designs for products is decisive to increasing the competitive edge of our products. In order to win against the domestic and world market competition, business players must be able to produce goods in line with the demand trend," explained the secretary general of the ministry of industry.          The director general is convinced that cottage industry can develop and compete in the market. Moreover, handicraft industry is able to increase its own production capacity.  Most businesses can develop themselves without bank credits.          Yunita Resmi Sari, the deputy director for research and banking regulation affairs of Bank Indonesia (BI) or the central bank, said that the ability to finance cottage industry was relatively high at present. The industry has high liquidity while the borrowing cost for asset financing is low. Its ability to repay debts is also high, she said.          Even, according to Yunita, about 54.9 percent house-hold (industry) respondents surveyed did not take credits from banks while 45.1 percent had borrowed money," she said.          She cited a BI survey on household and cottage business in 2011 carried out on 4,095 respondents in 10 different regions of the country. Low-income people with an annual income of Rp20 million accounted for 22.1 percent, middle-class people with incomes between Rp20 million and Rp65 million stood at 60.9 percent and the remaining percentage made the high income bracket with an annual earning of Rp65 million or over.          "Of the respondents, some 51.8 percent have no savings in banks while those who have money at banks accounted for 48.1 percent. About 54.9 percent of respondents did not borrow money from banks while 45.1 percent had borrowed money," she said.          According to Yunita, most of those (24.1 percent) people who borrowed money, obtained funds from non-financial institutions, 19 percent from banks and 16.04 percent from non-bank financial institutions," she said.          Yunita explained that in 2011 about 29.51 percent of banking credits by cottage industry were used for business capital, 19.95 percent for consumption, 18.51 percent for purchasing vehicles, 8.32 percent for education, 3.84 percent for health and 8.88 percent for others.          In order to develop home industry, Director General Anshori stressed the importance for home industrial businessmen to establish information networks on local resources that could be used by handicraftsmen to develop their business such as natural and cultural resources.         Besides, promotion of products is also necessary so that handicraft products would become popular both in the domestic and international markets.          For this purpose, Indonesia will hold an International Furniture and Craft Fair Indonesia (IFFINA) in Jakarta to start on March 11 next year. The sixth annual fair is expected to draw 3,500 buyers both from Indonesia and from foreign shores, said the Asmindo chairman for Jepara chapter.         The number is larger than this year's 3,000 buyers, chairman of the Jepara chapter of the association  Akhmad Fauzi added. Next year's fair will occupy a location of 20,000 sq. m of land including 2,600 sq. m for Jepara furniture, Akhmad said.          Foreign furniture producers are also expected to take part in the fair, he said.          The fair will serve to prepare for  similar fairs scheduled to be held abroad in a number of countries, such as   Malaysia, Singapore, Vietnam, Thailand, the Philippines  and China,   Europe and the United States.***2*** (T.A014/INE/o001) 21-07-2012 14:08:13