Sunday, February 26, 2006

Indonesia textile: Vying for 20% export growth

Indonesian Textile Association (API) is vying for a record export of US$8.35 billion this year, a 20% growth from last year's US$7 billion.
API Chairman Benny Sutrisno told today that the association was optimistic to book US$9 billion export this year.
That's indeed a very good sign. But even a US$8.35 billion would be difficult to be met considering huge challenges the industry is facing. Amid stiff competition from lower-cost countries like Vietnam, Sri Lanka, or Cambodia, the country's textile industry operates old machines that needs billion of US dollars investment to level the competition. At least 300 companies need to replace old machines with total investment up to US$400 million. The problem is local banks have been blacklisted the industry from their loan exposures.
The industry is also vunerable with increasing energy prices and labour costs. The industry claimed an electricity tariff hike would cut significantly product competitiveness as it could translate to 25% increase in operation costs.
Indonesia ranked 11th in the world's textile export with market share of 3.15% from the total market of US$194.7 billion in 2004. The country, meanwhile, ranked 9th in the garment export with market share of 4.45% from the total world market of US$258 billion.




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