T

he country'€™s textile industry is hoping government efforts to curb illegal imports and reduce electricity costs will help improve the industry'€™s growth in the fourth quarter of this year, a senior executive at the Indonesian Textile Association (API) has said.

API advisory board chairman Benny Soetrisno said on Monday that he expected the situation for the country'€™s textile industry would be better in the last three months of the year, driven by electricity price cuts and significant efforts to crack down on illegal imports.

'€œWe estimate that the textile industry will grow by up to 11 percent this quarter compared to the previous quarter,'€ he said. Such growth, however, would still be a far cry from the same period last year.

The textiles and textile products (TPT) industry has been among the worst performers across all industrial sectors this year as the labor-intensive industry experienced declining demand from both domestic and export markets due to the global economic slowdown.

The country'€™s gross domestic product (GDP) growth hit a six-year low of 4.7 percent as of the third quarter, with the consumer confidence index plunging to 99.3 points in October from 120.2 points in January.

According to analysis from Bank Mandiri, the TPT industry suffered a contraction with negative growth of 0.98 percent year-on-year (yoy) in the first quarter of this year.

The garment, textile and footwear industries had also laid off 46,000 workers as of September this year, the largest contributor to the country'€™s layoffs of more than 79,000 workers as of September.

Benny said, however, that he was upbeat there would be no more large-scale layoffs in the industry in the fourth quarter, as national demand and production were forecast to surge amid the government'€™s efforts to crack down on illegal textile imports and incentives for electricity use at certain times.

Finance Minister Bambang Brodjonegoro announced on Monday that the Tax Office, in cooperation with the National Police, had confiscated four containers containing illegally imported fabric, mostly polyester, from China worth Rp 3.3 billion (US$2.4 million), and 80 containers containing coal and mineral ores worth Rp 73.8 billion that were planned to be smuggled overseas.

The API has estimated that of the annual domestic demand for TPT of around 1.2 million tons, 60 percent was from imports and the remaining 40 percent from domestic production.

'€œThe thing is that around 45 percent of the 60 percent of imported products are illegally or allegedly sourced from illegal suppliers,'€ Bambang said.

As illegal products were usually sold at relatively low prices, textile products that were legally sourced from both domestic and foreign markets had lost their traction among local consumers, he added.

Benny said that with the crackdown on illegal textile imports, the local textile industry could eventually boost its production as domestic demand was expected to rise.

The country'€™s textile industry has been facing an anomaly where investment realization in the industry grew by 58 percent yoy to Rp 3.88 trillion in the first half, while many small players with a focus on the domestic market suffered from the economic slowdown.

Benny said the government'€™s third economic policy package that included a 30-percent electricity price cut for industries operating between 11 p.m. and 8 a.m. would also significantly help the textile industry to improve its capacity utilization as electricity accounted for 40 percent of most textile manufacturers'€™ production costs '€” excluding the price of raw materials.

He estimated that the textile industry'€™s capacity utilization currently hit only around 60 percent, a far cry from the ideal rate of between 85 and 90 percent.