Exclusive help desk to boost Indonesia textile sector

The Indonesia Investment Coordinating Board (BKPM) set up a special help desk for the textile industry on October 9 to help aid companies deal with internal concerns and counter layoffs that may hurt the industry.

The said help desk is manned by people who can assist with financial and general work concerns. Groups like the Indonesia Textile Association and Indonesia Footwear Association have also extended their assistance.

The BKPM set up the helpdesk due to the layoff of thousands of employees in May.

Indonesia Garment Exports

With support from the government, the garment export industry can expect a steady growth this year, given its steady increase since 2009. It is predicted to grow seven to eight percent annually, thanks to the increasing orders from Asia Pacific and the Middle East and the growing client base of suppliers in Egypt, UAE and South America among others.

Competitive Advantages

Even as a competitive global exporter of garments, Indonesia has lower labor costs than other equally competitive countries. It also has a low minimum requirement. While most countries would require a greater number of orders, theirs could range from at least 20 pieces, which is highly advantageous to those buyers who want to give the products a test. More and more garment suppliers are also using organic cotton, which is in-demand these days.

Challenges

Despite having low labor costs, Indonesia's garment industry faces challenges that slow down their growth unless addressed.

Among these is the outsourcing of cotton, which is one of the most essential raw materials in the production of garments. These days, majority of cotton is sourced from the US and Japan, while other fabrics, silk for one is sourced out from South Korea. To address this issue, the local government has encouraged the cotton producers for more output and garment companies to use alternative local products such as pineapple and flax fibers.

Another growing concern of the garment industry is the price competition with other countries. Since local garment makers employ handcrafted techniques and use outdated equipment, producing garments is slower and more expensive, unlike China and India, who have lower rates and high productivity, which are attractive selling points for buyers in US and Europe.

This article and its contents are provided by the Hinrich Foundation, a partner of Global Sources in promoting trade across Asia. The products and the suppliers featured in this article are export assistance program beneficiaries of the Hinrich Foundation.

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