Indonesian domestic textile market dominated by import products

Indonesian domestic textile products have continued to lose their foothold in competition on the domestic market over the past five years as imported products control 70 percent of the country’s domestic textile market, which is estimated to reach US$10 billion a year leaving only 30 percent of the market for domestic products, said the Indonesian Textile Association ( API) chairman Ade Sudrajat on Wednesday.

Ade said that API saw trade in textile products such as finished wear was relatively quiet such as at the Tanah Abang market in Jakarta, Turi market in Surabaya and Klewer market in Solo. The purchasing power of the consumers is declining that clothing is no longer a priority requirement.

The government needs to address the problem with the falling buying power of the people. Under earlier government , there was what was called cash direct aid (BLT) that could increase the peoples buying power.

API also noted that 90 percent of the basic material for ready made wear is imported like cloth from South Korea, China and Japan. However, API is optimistic that country’s textile industry would continue to grow as indicated by data from the Central Bureau of Statistics (BPS) which showed that the country’s exports of textiles rose 3.8 percent year-on-year in the first quarter of 2017.

In the next quarter the country’s exports of finished products would increase again.

Earlier the Industry Ministry said that it would coordinate with the Trade Ministry to curb imports of textiles and textile products (TPT) to protect the domestic industry.

Director General of Chemicals , Textiles and Multifarious Industries Achmad Sigit Dwiwahjono said that the government encourages development of upstream textile industry. The people are called on to use local products as their contribution to boosting the domestic industry.

Another challenge faced by the industry is that most of the country’s textile factories especially in weaving and knitting factories still use old machines, which are no longer competitive in efficiency.

Exports of TPT grew only 2 percent year-on-year to US$2 billion in the first two months of 2017, Achmad said.

The textile market is predicted to continue to increase domestically and globally with the growing population and increase in demand from non wear requirement such as for furniture.

Industry Minister Airlangga Hartarto said that the country’s TPT industry has suffered a contraction in growth . In 2016, investment in the TPT industry was valued at Rp7.54 trillion with export earnings at US$11.87 billion. Also important is that the industry provided jobs for 17.03 percent of working people in the manufacturing industry.

The industry ministry is seeking to prepare a draft regulation on incentive in the form of tax allowance for export oriented labor intensive industries. The purpose is to boost the domestic industry and to be more competitive.

Also textile industrialists should not delay investing otherwise in the next five years it would be more difficult for Indonesia to compete in international market facing other Asian major textile makers such as India, China, Vietnam and Bangladesh.