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North Asian Textile Firms Thread Way to Indonesia Textile Sector
July 05, 2011

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Textile companies across north Asia are making significant investments in Indonesia with the aim of exporting to their home country, a local industry representative said on Tuesday.

Ade Sudrajat, chairman of the Indonesian Textile Association (API), said foreign entrants would boost total investment in the textile industry to about Rp 6 trillion ($702 million).

“The arrival of investors, especially from South Korea, Taiwan and China, is very intense this year,” Ade said. “They are using Indonesia as an industrial base to sell to their domestic markets.”

The association estimated that in the first half of the year, total investment reached Rp 3 trillion.

Ade hoped the growth in investment would offer opportunities for employment across Indonesia. The increased investment in the sector could create jobs for between 100,000 and 200,000 workers this year, he said.

Labor is a significant cost of production in the textiles sector, prompting many developed countries with high costs of employment to outsource production to countries with cheaper labor, such as Indonesia.

The national government’s director general of manufacturing, Panggah Susanto, shared Ade’s view that Indonesia had become a target for the relocation of industries that require the hiring of large numbers of staff.

Panggah predicted that both the textile and footwear industries would grow 10 percent this year, higher than the government’s estimate for growth for the economy as a whole, which sits at 6.5 percent.

Industry Minister M. S. Hidayat said textiles and related products were a major driver of the nation’s industrial development.

Aside from the oil and gas sector, it was one of the most significant sources of foreign income as well as employing large numbers of people and helping to meet clothing demand across the country.

Industry Ministry data showed the textile industry employed about 1.4 million workers in 2010. Textile exports generated $11.2 billion last year, up from $9.26 billion in 2009.

The API predicts domestic sales would reach Rp 95.5 trillion this year, up from 85.4 trillion last year and Rp 77.6 trillion in 2009.

Antara