Indonesian textiles shift to local market
Because exports are weak, Indonesia’s textile manufacturers are turning to the domestic market with government help in an effort to boost sales of locally made goods.
The future of these factories is bright because they focus on the domestic market.
Danny Hydrady, manager of PT Ratutex Purwakarta, said recently: “Most textile companies export their products overseas. We are lucky because 70% of our textile products are sold in the domestic market.”
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Raturex Company is an integrated textile processing company in West Java. West Java Province contributes 40% of Indonesia’s textile and clothing products.
Danny said: “The domestic market has helped us survive, especially with the current appreciation of the local currency.” Since January, the company has produced normal volumes of textiles.
The Indonesian Textile Association said that among all business sectors, the textile industry has been most affected by the economic recession. In this year’s quarter, Indonesia’s textile industry shrank by 4.8% year-on-year, which was higher than the 1.61% contraction of the entire manufacturing sector, according to the Central Bureau of Statistics.
The Indonesian government has taken many measures to help stimulate domestic demand and make up for the decline in exports. One of the main measures is: “I Love Indonesia”, which encourages Indonesians to like and appreciate locally made goods and services.
Indonesia’s Ministry of Industry has implemented a program in which selected textile manufacturing companies can receive government subsidies when upgrading or changing their production machinery and borrowing money from banks. Companies are able to take advantage of government subsidies to improve their competitiveness. Currently, 50% of the country’s companies utilize outdated machinery, which consumes huge amounts of energy, chemical inputs and water. As a result, Indonesian products are more expensive than overseas products, especially compared to smuggled products that are illegally imported.
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