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Domestic Demand For Indonesia'S Textile Industry Grew Sharply In 2019, And Exports Declined Slightly.

2020/2/6 20:36:00 0

IndonesiaTextilesGarmentsExportsInternational Observation

According to the Indonesian Mandiri bank industry analysis report, Indonesia's textile industry has performed well in 2019, especially in the third quarter, due to the strong domestic demand market in Indonesia and the development of the overall textile and garment industry. Meanwhile, the national economic growth rate in the same period was only 5.02%.

The report points out that the major export markets of Indonesian garments include the United States, Japan and Germany, and the major textile export markets include China, Japan and Turkey. According to Mandiri Bank statistics, exports of garments amounted to US $7 billion 420 million in 1-10 months in 2018, and exports amounted to US $7 billion 150 million in 2019, and 3.6% in the 1-10 months. The total export volume of garment products in 2019 should exceed US $9 billion 900 million.

The Indonesian government is optimistic about the textile and garment industry. The Ministry of industry hopes that the export of textile garments will increase to US $15 billion in 2020, with an annual capacity of 1 million 640 thousand tons, and the new investment will amount to 81 Mega Indonesian shield (about US $5 billion 900 million). To achieve these goals, the Indonesian government will step up efforts to crack down on illegal textile imports, accelerate the development of industrial land and infrastructure around java to reduce logistics costs, and set up vocational schools to train relevant talents.

The Indonesian government also hopes to enhance export competitiveness through bilateral economic cooperation. At present, Indonesia has signed bilateral trade agreements with New Zealand, Australia, Japan, South Korea, China, Hongkong, China and India under the ASEAN framework, and has signed economic partnership agreements with Chile, the European Free Trade Association and Australia. Meanwhile, Indonesia is pushing forward a comprehensive economic partnership agreement with South Korea (IK-CEPA), which is expected to be signed in the first half of this year. The future will promote a comprehensive economic partnership agreement with the EU and Turkey, and sign some trade agreements with Iran, Mozambique and Tunisia.

However, Indonesia's textile and garment industry still needs to overcome several unfavorable factors. For example, Indonesia's natural gas, electricity and other energy costs are higher among the textile exporting countries, and Indonesia's labor costs are increasing year by year (especially in West Java and Jakarta), so that textile mills can migrate to areas with lower labour costs or other countries. At the same time, Indonesian textile producers (especially traditional family businesses or small manufacturers) are inefficient in terms of machinery and equipment. According to the analysis report, the machinery used in 30% textile factories in Indonesia has been over 25 years old.

External environmental factors may also affect Indonesia's textile industry. For example, Indonesia's textile industry raw materials, such as cotton, rely mainly on imports, so the change in the exchange rate of the rupiah against the US dollar may also increase production costs. According to the Indonesian textile association, the price of textile raw materials increased by 5-6% last year. In addition, Sino US trade friction has also made Chinese products dumped in Indonesia.

In September last year, the Indonesian trade ministry launched a defensive investigation against man-made fiber yarns, curtains and fabrics. Among them, the provisional defence tax was first collected, and curtain and man-made fiber yarns were excluded from the Levy of defence tax on imported textiles in Taiwan. In addition to the investigation case, there are polyester fiber cotton (28.74% anti-dumping duty) in the textiles currently taxed.

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