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The import restrictions imposed by the U.S. and EU on Chinese
textile products has benefited Indonesian textile producers, with
exports last year hitting US$9.47 billion, making textiles the
country's top foreign exchange earner in the non-oil and gas sector.
The figure, which was 9.43 percent higher than in 2005, is expected to
grow by 12 percent to $10.6 billion in 2007, according to the
Indonesian Textile Association (API)
"In 2007, the industry will continue to benefit from external
conditions. Exports to the U.S. and EU will remain good as the
safeguard measures against Chinese products will continue in place,"
Ernovian G. Ismy, API secretary-general, told The Jakarta Post on
Wednesday.
The U.S. and EU are currently the two biggest markets for Indonesian
textile products. Exports to these markets are expected to increase in
2007 by 27 percent and 3 percent respectively from last year.
A total of 42 percent of Indonesia's total textile earnings, or almost
$4 billion, comes from the U.S., while 19 percent, or $1.8 billion,
comes from the EU countries.
Indonesia, which holds 1.6 percent of the world textile market and 1.7
percent of the world garment market, exports its products to more than
200 countries worldwide. It now ranks 11th in textile exports and 9th
in garment exports.
Meanwhile, China is the largest textile exporting country in the world,
holding 17 percent and 24 percent of the global textile and garment
markets respectively.
In 2006, textile exports contributed almost 25 percent of total foreign
exchange earnings in Indonesia, second only to mining with a
contribution of 28 percent.
Although Indonesia's textile prospects are improving in the wake of the
sanctions against China, illegal imports continue to plague the
domestic market. The illegal influx of textiles is taking up to a 50
percent market share, according to Ernovian.
"According to our calculations, the volume of illegal imports, standing
at around 503,000 tons, contributed to lost national earnings of
approximately $500 million in 2006."
Another major problem facing the textile industry is aging machinery,
which eventually undermines efficiency. About 60 percent of the
machines used in the Indonesian industry are between 10 and 20 years
old, while 35 percent are more than 20 years old.
A five-year program to replace aging machinery is to start this year,
with total government soft loans of Rp 280 billion being made
available. It is hoped that this will stimulate new investment of up to
Rp 2.4 trillion in the national textile industry.
Some 100 textile companies, out of a total of 2,600 nationwide, are to
benefit from the program.
Textiles account for 15 percent of employment in the country's
manufacturing industry. There are 94 million people in the Indonesian
workforce, of whom 12 percent work in manufacturing industry.
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