Indonesia allocates $20m for footwear and textile factories
Indonesia’s Industry Ministry has allocated approximately $20.4 million for 2011, on a programme to revitalise the country’s textile, footwear and leather industries.
The director general of the Industry Ministry’s manufacturing industry division, Panggah Susanto, said that the financial aid would be distributed to 150 textile firms and 20 footwear producers and leather tanners – many of whom produce sports footwear – so that they could replace their aging equipment.
“We expect that with improved technology, the firms can be more productive and efficient in their production, and therefore they will be more competitive,” he said during the programme announcement on 29 March, 2011. He said that with better production and increased output, the local firms might also win a greater share of the global market.
Mr Panggah cited data showing a surge in domestic consumption of textile products in recent years. Annual per capita consumption of textile products has increased from 3.9 kilograms in 1999 to 4.5 kilograms in 2005 and to 5.3 kilograms in 2008. Consumption is estimated to increase to 6.5 kilograms in 2011.
The share of Indonesian textile exports in the global market is expected to rise from 1.8% in 2011 to 2.5% in 2014. The revitalisation program for the textile industry was initiated in 2007, and similar programs for footwear and leather were launched in 2009. Under the programme, qualified companies will receive aid worth 10% of the total purchases of new machines.
According to the ministry’s data, there are around four million spinning machines, 200,000 weaving machines and 34,000 knitting machines that are more than 20 years old currently in use by thousands of textile companies nationwide.
In 2010, under the same programme, the government disbursed around $16.6 million to 151 textile firms, which was lower than the government’s target of $17.7 million. It also channelled around $2.1 million to 24 footwear and leather firms, also less than the $2.8 million budgeted for.
The lower-than-expected amount of loans distributed was partly because many eligible companies had not been prepared to join the programme, director for textile and miscellaneous industries, Budi Irmawan, said during the programme launch.
Separately, the chairman of the Indonesian Textile Association (API), Ade Sudrajat, said that in 2010 a number of textile companies were not eligible to access the incentives due to delays in purchases. However, apart from such obstacles, he said, the machine revitalisation programme had benefitted the local textile industry.
“The 10% stimulant fund is quite meaningful for us as we mostly spend our own money to buy the machines,” he said.
Currently, Indonesia imports textile machines from China, Japan, and European countries including Germany, Belgium, Italy and Spain.
