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APSyFI: The national textile industry is headed for a trade deficit, 2018 exports grow 1% and imports grow 14% (yoy).--IKATSI: The growth of the national textile industry is still hampered by floods of imports, Indonesia needs a clothing security law.


	
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Behind the Growth of the Indonesian Textile Industry '15%' PDF Print E-mail
Friday, 28 February 2020

The government announced the textile and textile product (TPT) industry in Indonesia over the past year grew to 15.35%. The figure was quoted by various media outlets, although the purpose was unclear. The statement in the press release of the Ministry of Industry (Kemenperin) did not explain what grew? Export of textile products? Business value?

 

 

"The textile and apparel industry showed a brilliant performance throughout 2019 by recording a growth of 15.35%," Industry Minister Agus Gumiwang Kartasasmita said in a press release last Thursday.

 

The achievement, according to a press release, showed an improvement in the midst of global economic pressure. Significant growth in the textile and apparel industry sector was also supported by apparel production in industrial centers.

 

It is hard not to suspect that what is meant is the export of TPT considering that the Minister furthermore spoke about the global economic pressure. Which is much influenced by the dynamics of the global economy is none other than the export of a country, right?

 

There is no number elaboration other than that. The press release entitled "Throughout 2019, the Leading Industrial Sector Growth Sped" was talking more about the development of national industries. Of the 18 paragraphs in it, only the first four paragraphs touched on the textile industry.

 

TPT product export data in the last three years. Citing data from the Indonesian Textile Association (API), the export value of textile products in 2018 is US $ 13.2 billion.

 

Referring to Minister Agus' statement that the export value of the textile industry in 2019 reached US $ 12.9 billion (and absorbed 3.73 million workers), this country should actually be sad because the textile export value fell 3% annually .

 

Whereas two years earlier, the value of Indonesia's textile exports was still growing, respectively 5.9% and 5.6%. The only growth can only be seen from the TPT trade balance surplus which grew 9.4% to US $ 3.5 billion.

 

Is the contraction spelled out to grow? Unmitigated, double digit growth also. It is better for Mr. Agus to be more careful in releasing data, and to elaborate it in more detail so as not to cause public disinformation.

 

If we study further, API data actually shows that the labor-intensive sector which absorbs 3.73 million people is still promising. At a time when the country was dragged on the trade balance deficit, textiles actually still recorded a trade balance surplus.

 

Speaking of exports alone, its contribution to national exports actually increased, because exports of US $ 12.8 billion were equivalent to 7.7% of national exports. In comparison, in 2018 TPT exports at that time were equivalent to 7.3%.

 

If compared to the non-oil and gas exports which last year were US $ 154.99 billion, the TPT export value was equivalent to 8.3%. The contribution of TPT exports to non-oil and gas exports also grew compared to the 2018 position of 8.1%.

 

This means that the share of TPT industrial product exports to national exports has increased, amid weakening other sectors such as mining and plantations. Indonesian TPT products can still penetrate the world market, even though the market share is shrinking and now only around 3%.

 

Considering Indonesia's trade balance was still lacking over the past year, valued at US $ 3.2 billion, it is better for the government to pay attention to the TPT industry which is proven to be able to maintain a surplus amid the turmoil of trade and a slowdown in the world economy.

 

During 2019, the trade balance of TPT products recorded a surplus of US $ 3.5 billion. That is, this industry exports more textile products than it imports. When compared with the total Indonesian trade balance, again the results are quite astonishing.

 

The surplus of US $ 3.5 billion in the TPT trade balance was equivalent to 207.5% of the national trade balance (because last year it still posted a deficit). When compared with the non-oil and gas balance, the TPT surplus value is equivalent to 56.4% of the non-oil and gas balance surplus.

 

In other words, our textile industry "subsidizes" the national trade deficit, so that it does not fall further into the deficit dump. if the government does more by providing the right incentives, of course this sector has the opportunity to score a greater surplus.

 

So far, the government through the Ministry of Finance has provided incentives to reduce textile imports from China by releasing three Minister of Finance Regulations (PMK) as a form of Temporary Security Measures Import Duty (BMTPS) for textile products and textile products.

 

Assuming the rate of exports of TPT products is still maintained, the TPT trade balance surplus will increase again this year because the value of imports has declined due to the policy. However, this policy does not last forever so there needs to be a further incentive formula.

 

 
		

		
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