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Textile producers push for EU, Trans-Pacific partnerships

Local textile and garment manufacturers are pushing the government to join a greater economic partnership with European and Pacific Rim countries, saying that taking part in the two international trade pacts will help Indonesia boost its exports

Khoirul Amin (The Jakarta Post)
Jakarta
Tue, February 16, 2016

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Textile producers push for EU, Trans-Pacific partnerships

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ocal textile and garment manufacturers are pushing the government to join a greater economic partnership with European and Pacific Rim countries, saying that taking part in the two international trade pacts will help Indonesia boost its exports.

Garment manufacturer PT Pan Brothers deputy CEO Anne Patricia Sutanto recently said she expected that the government would stay committed to joining comprehensive partnerships with the EU and US-led Trans-Pacific Partnership (TPP).

'€œWe want an assurance for our buyers that Indonesia will stay consistent with its free trade agreement [FTA] with Europe, or possibly become a member of the TPP,'€ she said during a recent visit to the Industry Ministry'€™s office.

Anne said that the FTA with the EU and the TPP would speed up her firm'€™s expansion project as the partnerships would likely boost demand from the partnerships'€™ participating countries.

Pan Brothers, which is listed on the Indonesia Stock Exchange (IDX), was currently exporting 44 percent of its products to the Asia Pacific region, 26 percent to Europe and another 26 percent to the US market, she said.

Anne added that her company had planned to invest around US$40 million in 2016 to 2017 to expand its production capacity, with demand for new workers hitting 12,000 people this year and 15,000 people next year.

Indonesian Textile Association (API) chairman Ade Sudrajat said that his association basically welcomed any partnerships with other countries as long as they helped reduce both tariff and non-tariff barriers for Indonesian textile products.

Trade Minister Thomas Lembong said previously that his ministry would focus on speeding up talks on the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA), a bilateral agreement with Australia and a partnership with Switzerland, Norway, Iceland and Liechtenstein (European Free Trade Association) this year.

The government has also expressed its intention to join the TPP once it has concluded talks on the Indonesia-EU CEPA.

The CEPA, which was initially negotiated in 2012, will cover issues including reduction of trade barriers and liberalization of government procurement projects.

Nations that are covered by the recently signed TPP are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the US.

The Industry Ministry'€™s director for textiles, leather, footwear and various industries, Muhdori, said recently that the textile industry was one of the sectors that was most ready to compete under free trade arrangements.

'€œOur textile industry is already structured from its upstream to downstream. Most of the raw materials used by the industry are also domestically sourced, with only some specialty fabrics or yarns imported,'€ he said.

Indonesia'€™s textile exports gradually increased from $11.2 billion in 2010 to an estimated $22.65 billion last year, with imports value always below exports value, according to Industry Ministry data.

The textile industry grew around 6 percent in 2011 to 2013 but slowed to only 1.53 percent in 2014.

Should Indonesia join the TPP, one of the main competitors for its textile products in the US import market would be Vietnam, which is already a member of the TPP.

Vietnam'€™s share of the US apparel import market could go up from 10 percent to 35 percent once the TPP is implemented, according to consulting firm O'€™Rourke Group Partners, LLC as quoted by AmCham Vietnam.

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