C. Java textile industry hangs by a thread

The Jakarta Post ,  Jakarta   |  Sat, 06/02/2007 8:52 AM

The Jakarta Post, Semarang

Illegal textile imports and dilapidated equipment have put Central Java's textile industry at risk of losing out to the competition.

Head of the Indonesian Textile Association in Central Java, Joko Santoso, said old machinery has slowed production, and that illegal garments entering the country were now meeting around 55 percent of national demand.

He said that only 5 percent of textile products are legally imported, while the association's members supply the remaining 40 percent.

""If the high number of illegal textile products could be lowered, the Indonesian textile industry could be the master in its own country,"" he said during the recent 2007 International Garment and Textile Machinery and Accessories Exhibition in Semarang, Central Java.

Overall, 117 companies from 13 countries -- including China, Germany, India, Japan, Switzerland and the U.S. -- participated in the exhibition, which was jointly organized by the provincial administration, private companies and the textile association.

According to the head of the Central Java Industry and Trade Office, Ahmad Sulhadi, roughly 75,000 textile and garment businesses operate across the province, the largest of which are located in Jepara, Kudus, Pekalongan, Surakarta, Semarang, Sragen and Tegal.

However, 70 percent of the businesses still use relatively antique machinery, ranging from 15 to 25 years old.

Joko said it would be difficult to control the illegal garment imports because of the country's open market.

Invariably, the mushrooming of illegal, cheaper garments has caused the legitimate side of the industry to struggle.

Efforts are being made to replace the aged machinery, though Joko conceded the process would undeniably take time.

""Businesspeople are facing financial problems to replace machinery with ones that are modern. There is fresh financial assistance for small industry, but the amount is limited,"" he said.

A new Trade and Industry Ministry policy that has been approved by the House of Representatives has provided assistance to and stimulated the textile industry, allowing operators to purchase new machinery.

""The assistance, worth Rp 255 billion (US$28.3 million), has been allocated from the 2007 budget,"" Joko said.

Despite the obvious challenges ahead, Joko remains optimistic that Central Java's textile industry can remain competitive in the international market.

Ahmad Sulhadi said that despite the lingering old machinery, Central Java's textile industry has total investments valued at Rp 160 billion, with an annual production value of around Rp 510 billion.

The industry's export value has steadily increased annually, recorded at $409.8 million in 2003 and $567.5 million in 2005.

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