A program initiated by the Industry Ministry to help textile manufacturers revitalize their aging machines, and thus boosting their productivity, is almost fully booked, an official says.
The textile machinery renewal program itself is divided into two schemes: Government direct aid and soft loans.
“About 118 textile companies have been confirmed by the ministry to receive Rp 118 billion aid, while another 34 companies are waiting to get the soft loan scheme,” said the ministry’s textile industry director Arryanto Sagala on Tuesday.
Under the aid scheme, the government will help finance 10 percent of new machinery purchases and has allocated Rp 190 billion for the purpose.
A firm who wants to participate must invest at least Rp 500 million for the machinery investment and hand in its application before July 31 to the ministry.
Each company can get a maximum aid of Rp 5 billion.
“The ministry only plans to give the aid to slightly more than 100 companies. The confirmed companies that have a total investment value of Rp 1.23 trillion already fulfil our plan. However, there is still Rp 72 billion left to be given to other companies,” Arryanto said.
While there is chance left for other companies in aid scheme, Arryanto said the chances for companies who want to get soft loans are smaller.
The soft loan scheme has an easier requirement. A participant should invest between Rp 100 million to Rp 5 billion and repaid the loan in five-year term.
The loans can only be used to fund 70 percent of the total investment value and confirmed participants must pay a seven percent interest annually.
However, the ministry only allocated Rp 50 billion for the soft loan scheme, while about 34 companies with total investment value of Rp 82.51 billion have given applications for this scheme, Arryanto said.
“With the limited budget, the ministry must conduct a tight selection process.”
Ade Sudrajat, vice chairman of the Indonesian Textile Association (API), said the renewal program has been relatively successful.
“I think the program is a success, acknowledging that many companies want to take part in this
program.”
According to Ade, the textile export slumped 14 percent in year-on-year basis in this year’s first quarter
However, in the second quarter, the export value rise 2 percent in year on year basis.
The textile machinery renewal program began in 2007. (mrs)
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