Thu, 03 Apr 2008
The Jakarta Post, Jakarta

The government has set a record textile exports target for 2009 of $US11.8 billion, achievable because of industry restructuring, industry minister says.

Minister of Industry Faahmi Idris said Wednesday the textile industry was one of the government's priorities, which could be seen by government efforts to help finance the restructuring.

"Over the last 10 years, the industry has consistently added an average $5 billion surplus to our export earnings. It is a very important sector," said Fahmi, as quoted by Antara, at the opening of the Bandung Intertex 2008 textile fair, Bandung, West Java.

The fair involves 595 international and local participants and will be held until April 5.

Fahmi said the industry could employ 1.62 million people in the next two years.

Last year, textile exports generated $10.03 billion in foreign exchange income, up 6.13 percent from $9.445 billion in 2006.

This year, textile exports are estimated to reach $11 billion, Fahmi said.

With assistance from the government, the country's labor-intensive textile industry is presently restructuring to boost its global market competitiveness. The global market is currently dominated by Chinese producers.

Last week the government launched phase two of its textile industry revitalization program, which includes Rp 266 billion ($30.6 million) in subsidies for upgrading machinery and a Rp 45 billion interest rate subsidy.

As part of the program, textile companies can apply for a 10 percent discount on the purchase of imported machinery and a 15 percent discount on domestic machinery.

Every company is entitled to a maximum of Rp 5 billion in reimbursements.

"The industry's biggest problem is inefficient machinery," said Fahmi.

He said most machinery has been used for more than 20 years, forcing the companies to upgrade due to stiff global and domestic competition.

Smuggling is also a problem. Over the last couple of years, there has been a massive flow of cheap products into Indonesia from neighboring countries, Fahmi said.

The industry is set to diversify and expand into other export markets, including the European Union, to safeguard against a possible economic recession in the United States, the country's traditional export market.

The Indonesian Textile Association (API) estimated exports to the U.S would account for 21 percent of total textile exports this year, while exports to the EU would account for as much as 24 percent.

Indonesia is also seeking increased market access to Latin America, Africa and countries in the Middle East.

According to API, 70 percent of Indonesia's textile products are exported. The remaining 30 percent are produced for the domestic market.



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