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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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Home arrow Latest News arrow Functional Clothing Towards Global Markets

Functional Clothing Towards Global Markets PDF Print E-mail
Written by Maizer   
Friday, 21 June 2019
There are many ways to go to Rome. This saying seems appropriate to describe the optimism that is rolling at a brief meeting between President Joko Widodo and the board of KADIN (Chamber of Commerce and Industry) at the Merdeka Palace Jakarta.


The discussion resulted in several recommendations regarding breakthroughs, amid economic problems due to the global slowdown that were exacerbated by the United States (US) trade war-China.


One of the roads that is driven is textile. Long time not much highlighted, it turns out the textile industry recorded an encouraging performance. This industry grew when many other industrial branches were depressed. In 2018, textiles grew 8.73%. That trend continues. In the first quarter of 2019, amid the increasingly heated US-China trade war, Indonesian textiles grew stronger, reaching 19%.


Increasing in textile sector in the first quarter of 2019 was mainly supported by apparel industry which record growth of 29.2%. Meanwhile, data from the Central Statistics Agency (BPS) also showed that the production of large and medium manufacturing industries (IBS) during the first quarter of 2019 only grew 4.45%. The momentum of this textile deserves adequate support. Textile-garment products, which are more popularly called textiles and textile products (TPT), have the opportunity to fill Chinese products that are subject to high taxes on the US market.


The latest developments in the textile and apparel industry (garment) should be welcomed. Since decades ago textiles have become a mainstay of Indonesian exports. It's just that since 2013 textiles and garments have experienced a slowdown. Its export performance tends to decline, although not so sharply. However, in 2018 signs of revival began to appear. Exports reached USD13.22 billion, stretched by 5.55% from 2017. Textiles and garments are also still labor intensive, and can absorb employment of up to 3.6 million.


The increase in performance of the textile and garment industry since 2018 is inseparable from the substantial investment in the upstream sector, especially for rayon production (textile yarn). PT Asia Pacific Rayon (APR) in Riau, for example, has invested Rp. 11 trillion, for a new plant that starts production in 2018.


According to records at the Ministry of Industry, APR also increased its production capacity to 240 thousand tons per year. Of this amount, 120 thousand tons are exported and the rest for domestic industry needs will be cheaper but with better quality. This supply in turn also stimulates the downstream sector. Textile and garment exports rose 1.1% in the first quarter of 2019, while in the same period imports fell 2%.


Textile industry and textile products (TPT) must enter the 4.0 industry scheme, in order to compete. Investment needs are unavoidable. After all, the Ministry of Industry believes that the investment will be profitable, given Indonesia's huge domestic market with its population reaching 265 million. No wonder the TPT industry is included in the government's priorities in the Makin Indonesia 4.0 scheme which is now being intensified by the Ministry of Industry. The target is to enter the top five in the world by 2030.


The government also encouraged the TPT industry to carry out an immediate transformation, by optimizing the use of digital technology, such as 3D printing, automation, and the use of internet of things (IoT). The transformation is believed to be able to boost productivity and quality at the same time, efficiently, and build a TPT industry cluster that is integrated with technology-laden industries or 4.0 industries.


Basic capital is available. The structure of textile industry has been integrated from upstream to downstream, and its products are also well known in international market. With economic growth and a shift in demand from basic clothing to more functional clothing, such as sportswear and work uniforms, the national textile industry just needs to adjust production capacity and increase its economies of scale to meet domestic and export demand.


However, for short-term needs, in order to take advantage of the momentum, it does need special incentives. The decrease in logistics costs, especially land and sea transportation, is still an important issue. The rest, as recorded in his meeting with the President, tax reform and adjusting corporate income tax (PPH) to 17-18% (from the previous 25%) also surfaced.


These issues are considered important to realize the target, that in 2025 the value of Indonesia's TPT exports can exceed USD30 billion per year.



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