Textile industry must improve to survive, warn analysts<\/p>\n
JAKARTA (JP): Comprehensive restructuring and efficient
\nbureaucratic procedures are needed if the local textile industry
\nis to survive, according to stock analysts.<\/p>\n
Three analysts contacted by The Jakarta Post on Monday said
\nthat many textile companies had lost their competitiveness after
\nnew overseas players entered the market because of local
\ninefficiencies and their small size.<\/p>\n
\"I think it would be difficult for the textile sector to
\nmaintain its position as the country's single largest exports
\noutside oil and gas,\" a PT HG Asia Indonesia analyst said.<\/p>\n
\"I would say that our textile industry, at its present stage
\nof development, is already mature or, as investors describe it, a
\n'sunset' industry. So, in my viewpoint, it's time for textile
\ncompanies to diversify their product mix and focus on higher
\nquality or value-added products,\" Hanafi Wongso from PT BZW Niaga
\nSecurities said.<\/p>\n
The analysts blamed production and distribution inefficiencies
\nas the major factors slowing most textile companies' growth.<\/p>\n
\"The (textile) industry can survive if it can be more
\nprogressive in using technology and in improving its economies of
\nscale,\" Phua Kok Kim from PT HSBC Securities Indonesia said.<\/p>\n
Kim said the future would be positive for large companies
\n(like Polysindo and Indorama) because they were using efficient
\ntechnology.<\/p>\n
\"Moreover, with a big business scale, they (large companies)
\ncan obtain capital more easily,\" Phua argued.<\/p>\n
Phua said smaller companies must consolidate.<\/p>\n
He said that industry sources say that textile exporters would
\nbe more competitive if bureaucratic procedures were streamlined
\nto improve distribution.<\/p>\n
The HG Asia analyst, who requested anonymity, said that,
\nbecause it was labor intensive, Indonesia's textile industry was
\nless attractive than in other countries, particularly Myanmar,
\nSri Lanka and Latin America, which have cheaper labor.<\/p>\n
She said the key to boosting the industry's performance was to
\nattract more investment to increase plant capacities and improve
\nproduction technologies. But she said it might be too late for
\nsome firms.<\/p>\n
\"A multinational firm recently told me that it has considered
\nmoving to Sri Lanka,\" she said.<\/p>\n
The analyst reckoned the future of the textile industry would
\ndepend on its target market: for exports or the domestic market.<\/p>\n
\"I would say that there is still a bright future for a textile
\ncompany which concentrates on the domestic market with an
\nassumption that the domestic consumption will grow in line with
\nincreases in purchasing power,\" she said.<\/p>\n
But she said it was difficult for Indonesian textile firms to
\nincrease their exports because their competitors in other
\ncountries were improving.<\/p>\n
Hanafi said that textile companies could maintain their
\nprofitability by increasing their capacity.<\/p>\n
\"With more players coming into the market, they can no longer
\nexpect significant price increases. So, they should increase
\nsales volume,\" he said. (alo)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/textile-industry-must-improve-to-survive-warn-analysts-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}