OVERVIEW THE INDONESIA TEXTILE INDUSTRY

RAMON BANGUN

Director of Textile and Multifarious Industry

Directorate General for Manufacturing Industry Base

Ministry of Industry

October, 2014

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Non Oil Industries growth in the second quarter was 6.58% higher

than the national economic growth of 5,95% and the performance of

the textile industry at 5.93%.

The average of industrial growth for the past five years is 5%, while

that of export growth 8%/year. Indonesia has only 1.8 % of world

market share and domestic market share is still below 60%

Textile industry are the strategic industry to be developed because it

has a significant role in contributing foreign exchange, provides lot

of work opportunities and also supplies the basic needs of people.

The industry has 10.6% share of total manufacturing industry work

force. Export surplus more than U.S. $ 5 billion per year.

The industry has a deep structure from up stream to downstream

consist of 4 type of manufactures that are, man made fiber, yarn,

fabrics and garment.

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Type of Industry unit quantity Machine age > 20 years

quantity %

Spinning * Spindle 7.803.241 5.025.287 64,4

Weaving * Unit 248.957 204.393 82,1

Knitting * Unit 41.312 34.743 84,1

Finishing * Unit 349 325 93,2

Garment * Unit 290.838 226.854 78,0

1. Number of Machine in Textile Industry

Source: * The Industrial Strategy Proposal, Jetro Jakarta 2005

TEXTILE INDUSTRY RESTRUCTURING PROGRAM

BACKGROUND

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TEXTILE INDUSTRY RESTRUCTURING PROGRAM

One of the major problems of the textile industry is the life of the engine that are outdated (over 20 years) this leads to high energy consumption, engine speed and low product quality and also another issue that must be faced by the industry is the emergence of newly industrialized countries that already adopting new technologies

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• Ministry of Industry on 2007th launched Textile Industry Restructuring Programme. To support textile industry for old machinery replacement to enhance competitiveness with government incentive.

2. Objectives

COUNTRY OF ORIGIN OF TEXTILE MACHINERY based on restructuring programme

2007 2008 2009 2010 2011 2012

No. Country % No. Country % No. Country % No Country % No. Country % No. Country %

1 Japan 38.71 1 Jepang 53.00 1 China 22.60 1 CHINA 25,7 1 SOUTH KOREA 87,46 1 SOUTH KOREA 81,82

2 China 15.69 2 Germany 16.00 2 Japan 21.39 2 SOUTH KOREA 17,8 2 CHINA 8,10 2 INDIA 7,82

3 Germany 10.39 3 Singapura 10.00 3 South Korea 18.67 3 JAPAN 16,4 3 INDIA 3,34 3 CHINA 6,85

4 Taiwan 7.32 4 Taiwan 7.00 4 Taiwan 10.05 4 TAIWAN 9,1 4 SWITZERLAND 0,51 4 TAIWAN 2,29

5 Hongkong 6.57 5 Italy 6.00 5 Indonesia 6.07 5 INDONESIA 8,22 5 INDONESIA 0,47 5 SWITZERLAND 0,66

6 Switzerland 4.24 6 China 4.00 6 Germany 4.90 6 GERMANY 5,78 6 FRANCE 0,05 6 USA 0,25

7 India 3.18 7 South Korea 3.00 7 Hongkong 4.19 7 INDIA 4,7 7 JAPAN 0,04 7 JAPAN 0,13

8 South Korea 3.18 8 Amerika 1.00 8 India 2.72 8 SWITZERLAND 3,22 8 TAIWAN 0,01 8 INDONESIA 0,08

9 Italy 2.23 100.00 9 Switzerland 1.67 9 ITALY 2 9 HONGKONG 0,01 9 ITALY 0,05

10 USA 2.23 10 USA 1.47 10 HONGKONG 1,65 10 GERMANY 0,01 10 GERMANY 0,02

11 France 1.27 11 Italy 1.21 11 USA 1,17 100 11 SINGAPORE 0,01

12 Belgium 1.17 12 Denmark 1.00 12 FRANCE 0,74 100

13 Indonesia 1.17 13 France 0.71 13 BELGIUM 0,61

14 Singapore 0.85 14 Singapore 0.54 14 SINGAPORE 0,57

15 England 0.42 15 England 0.46 15 VIETNAM 0,57

16 Austria 0.32 16 Spain 0.42 16 ENGLAND 0,35

17 Czech 0.32 17 Austria 0.38 17 MALAYSIA 0,3

18 Spain 0.32 18 Turkey 0.33 18 AUSTRIA 0,26

19 Sweden 0.21 19 Vietnam 0.29 19 SPANYOL 0,22

20 Greece 0.11 20 Malaysia 0.25 20 FINLAND 0,13

21 Malaysia 0.11 21 Thailand 0.21 21 SOUTH AFRICA 0,13

100 22 Belgium 0.17 22 CZECH REPUBLIC 0,09

23 Sweden 0.13 23 NETHERLANDS 0,09

24 Australia 0.04 24 TURKEY 0,09

25 Canada 0.04 25 DENMARK 0,04

26 Czech 0.04 26 SWEDEN 0,04

27 South Africa 0.04 27 THAILAND 0,04

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Number Analysis Textile Industry

2007 - 2013

1 Labor Increase 118.341

2 Production Capacity

Growth (%) 14 - 20

3 Productivity Growth

(%) 4 - 10

4 Efficiency In Energy (%)

2 - 7

EVALUATION OF TEXTILE INDUSTRY RESTRUCTURING PROGRAM

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NUMBER OF MACHINES IN TEXTILE AND TEXTILE PRODUCTS INDUSTRY

Source : Restructuring Program Ministy of Industry

Machinery Status Before and After Restructuring Program

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Type of Industry Unit Machines Age 20

yrs *

New Machinery by Restructuring

Program in 2007-2013

Spinning MP

5,025,287

1,848,212

Weaving ATM 204,393 7,249

Knitting MR 34,743 2,441

Finishing Unit 325 448

Garment MSJ 226,854 67,386

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INVESTMENT PROGRESS

Source of machines : mostly imported

Type of Machines Investment Value (USD) %

Spinning 190,000,000 61.02%

Weaving 39,340,000 12.63%

Dyeing 24,715,100 7.94%

Knitting 22,800,630 7.32%

Others (boiler, air compression, etc)

34,548,130 11.09%

Total 321,403,860 100.00%

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INDUSTRY

INVESTMENT NEEDS FOR REPLACING THE OLD MACHINE,

BASED ON MACHINE AGE CATEGORIES (in Million USD) TOTAL

11-19 Years >20 Years

FIBER/FILAMENT 393,26 11,24 404,50

SPINNING 131,97 412,80 544,77

WEAVING 303,92 218,25 522,18

KNITTING 89,14 32,69 121,83

FINISHING 111,19 60,50 171,70

GARMENT 5,02 4,17 9,18

TOTAL 1.034,51 739,65 1.774,16

ESTIMATED OF THE INVESTMENT NEEDS FOR REPLACING THE

OLD MACHINE

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Providing skilled workforce through training program. Since 2011

the Ministry of Industry has facilitated training for more than

16,500 people to provide skilled workforce for garments and

footwear industry. The Ministry of Industry will continue to increase

the competence and upgrading human resources for textile,

garments and footwear industry;

Developing standards of textile products (SNI) for the purpose

good quality, security and safety of Textile and Textile Product and

the developing of workforce competency standard textile industry

(SKKNI)

Facilitation program exhibition in domestic and foreign for market

access, promotion national textile products;

Prospect of Indonesia Textile Industry

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• Competitiveness

of Indonesian textile industry will continue to improve with

increasing energy efficiency and increased productivity

• Indonesian textile industry have market opportunities in

local market (with 220 million people) and exports that

have been targeted to reach US$13.3 billion in 2012.

• Clothes for Moslems, High fashion ladies garments and

those with ethnic designs could help boost the country's

textile industry

• Technical Textile and Non Woven are another sector textile

will be priority developed in the future

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