Indonesia textile sector faces challenge

textile factoryThe textile sector in Indonesia is likely to attract investment of just about $155 million in 2013, according to Indonesian Textile Association (API).

Most of the investment in the textile sector would be for purchase of new machinery and equipment, API Chairman Ade Sudrajat was quoted as saying by the Antara news agency.

Sudrajat said most of the textile machinery purchase would be done by domestic players. He said foreign investors only spent $51 million of the total $247 million spent on textile machinery purchase in 2012.

Separately, Industry Ministry textiles chief Ramon Bangun said that the sector faces two major problems in 2013: a 15 per cent increase in electricity rates and existing finance ministry customs regulations, which local textile makers said have hindered their growth.

“The national textile and textile products industry is facing high energy costs and customs drawback problems,” Ramon said.

Indonesia’s garment and apparel sector is highly concentrated on the island of Java, particularly that of West Java and the island of Batam which is a free trade zone.

The sector employs 1.3 million people as of 2011 making it one of the most important elements of the country’s manufacturing industry. Some 61 per cent of manufactured garments are exported to international markets as various leading international apparel brands use Indonesia as a manufacturing base for their global exports.

Exports of textiles and garments rose by 19.7 per cent year-on-year to $12.1 billion at the end of 2011 and to $13.7 billion in 2012. The US remains Indonesia’s largest market for garments and textiles accounting for 36 per cent of total exports followed by the EU with 16 per cent and Japan with 5 per cent.