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Home arrow Latest News arrow Efficiency of Indonesian Textile and Export TPT Production


				
			
			
Efficiency of Indonesian Textile and Export TPT Production PDF Print E-mail
Written by Maizer   
Tuesday, 21 May 2019
Observers of International Trade, Economics, Department of Economics, University of Padjadjaran (Unpad), Dr.Yayan Satyakti Phd said, the Textile and Textile Products Industry (TPT) is one of Indonesia's 10 leading export commodities which continued to decline.

 

Yayan said, entering into the top 10 export commodities, the TPT industry ranked second with an export value of US $ 11.45 billion, after palm oil exports amounted to US $ 16.7 billion. The value of textile exports declined since 2014 (US $ 12,742 billion) in 2015 (US $ 12.28 billion) in 2016 (US $ 11,853 billion) and US $ 11.50 billion in 2017. "Based on records from 1988 to 2017, the highest export value occurred in 2011 amounting to US $ 13.7 billion, "said Yayan.

 

Unpad Academics said, in the international context according to the World Integrated Trade Solution - World Bank (WITS-Worldbank) in 2019, Indonesia's TPT export value was ranked 16th (amounting to 1.69% of the world export market) in 2017. Since 2012 , Indonesia ranks 17th (amounting to 1.59% of the world export market) and ranks 18th (amounting to 1.51% of the world export market) in 2015.

 

The first rank is occupied by the People's Republic of China with an export value of US $ 270.5 billion, followed by India (US $ 38.2 billion), Germany (US $ 36.9 billion), Vietnam (US $ 27.8 billion). The 15th place is occupied by Britain (US $ 12.9 billion). While the ranking below Indonesia is occupied by Poland (US $ 8.15 billion), Japan (US $ 8.04 billion), Malaysia (US $ 7.2 billion), and Mexico (US $ 6.9 billion).

 

Yayan explained, if you look at the data, it seems that the Indonesian textile industry has decreased and reached its maximum limit in 2011. While within ASEAN, Indonesia's position has been replaced by Vietnam, which will overtake Malaysia, which will replace Indonesia's position in the future. According to the Ministry of Industry's claim, the problem of decreasing the competitiveness of the textile industry is caused by capital, high electricity costs, labor costs and exchange rate policies compared to competitor countries.

 

Yayan said, for example, the cost of capital for investment in China is only about 6% compared to Indonesia which reached 14%. Then labor costs in Indonesia are more expensive than competitors. "If we look at this phenomenon, it seems that the Indonesian textile industry is experiencing problems of efficiency in terms of production activities," said Yayan, recently.

 

The solution that must be done, continued Yayan, is to follow the assumption of a green economy policy. The TPT industry gets incentives if develops industries with machines that are efficient in terms of energy consumption (green industry). The TPT industry will get cheaper capital funding subsidies if they want to adopt energy and water efficiency (similar thing has been done in Bangladesh as the Clean Development Mechanism). For the record, the position export value of Bangladesh ranked 6th in 2015 (US $ 28.5 billion) from US $ 21.5 billion in 2012 (ranked 9th).

 

In addition to this, the European Union has since carried out the Save Energy in Textile (SET) program, MSMEs have become  focus of policies to conduct energy efficiency to improve  competitiveness of the textile industry. Around 55% of TPT MSMEs in the European Union follow a program to improve industrial efficiency and competitiveness of  textile industry.

 

Based on these two examples, according to Yayan, these countries shifted the textile industry to be more efficient and more productive and carried out a policy of the textile industry paradigm to be cleaner and more efficient with  green economy approach.

 

 
		
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