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Despite higher production costs resulting form surging oil
prices and tight competition in the world textile market, the
Indonesian Textile Association (API) is optimistic that textile exports
will grow by 10 percent next year from about US$10.2 billion this year.
"We believe our exports will increase because many textile companies
are installing new machinery that can improve their production
efficiency and quality," said executive secretary of the association,
Ernovian G. Ismy, on Friday.
He said the procurement of the new machinery was possible as the
government had allocated Rp 225 billion (US$24,193 million) this year
to subsidize interest on loans taken out for reequipping purposes
Many textile producers have machinery that is more than 20 years old,
which has resulted in them losing competitiveness.
The government has also introduced tax incentives and removed import
duties on cotton, a major raw material used by the textile industry.
In line with improved efficiency as a result of reequipping, Ernovian
said that world demand for Indonesian textile products was also likely
to grow.
He predicted that demand from the United States, Indonesia's biggest
buyer, would increase in line with the expected increase in per capita
textile usage in that country to 4.7 kilograms next year from 4.6
kilograms this year.
However, he said that the association's target of achieving 10 percent
growth in textile exports this year would be difficult to achieve,
adding that total textile exports this year would likely only grow by 8
percent to about $10.2 billion from $9.5 billion in 2006.
"But, with the improvement in production facilities at many major
textile producers, we hope the country's textile exports will continue
to increase, possibly reaching $14 billion in 2010," he said.
Besides exporting their products, producers also wanted to increase
domestic sales, he said. "However, efforts to increase domestic sales
are hampered by the flooding of the market with smuggled goods from
countries like China and Taiwan," he said, adding that the customs
service needed to work harder to prevent smuggling.
He said that illegal imports accounted for more than 50 percent of the
one million tons of textiles and textile products sold in Indonesia in
2006.
In order to help local textile producers, the association had asked
government institutions to use locally made fabrics for the uniforms of
civil servants, he said.
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