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Indonesian textile exporters cut-down growth target
Nov '11
Textile manufacturers in Indonesia have reduced their targets for export growth next year owing to economic slowdown, especially in the US and the EU, its two main export destinations.

For the last couple of years, Indonesian textile exports witnessed a growth of around 20 percent. But, now the exporters are predicting that exports will increase in single digits and peg the growth at around 5 percent in 2012.

During the current year, textile manufacturers in the country project the earnings from exports at US$ 13.1 billion compared to last year's figures of US$ 11.2 billion, an increase of 16.96 percent. Owing to the European debt crisis, the export growth target for 2011 was recently revised downwards by around 4 percent to US$ 13.1 billion by the Indonesian Textile Association (API).

According to the Trade Ministry, Indonesia exported textile items worth US$ 9.16 billion in the January-August period, contributing 8.53 percent to the total non-oil and gas exports of US$ 107.4 billion during the same period.

In 2010, exports to the US and European markets contributed 41.44 percent and 13.81 percent respectively to the country's overall textile exports.

Recently, the US has renewed the generalized system of preferences (GSP) facility to Indonesia, and hence, its exports to the US are expected to increase in spite of the ongoing financial crisis in the Western nation.

The GSP scheme allows Indonesian goods, including textiles, to enter the US at zero percent import duty, which gives these goods a competitive edge over products from other countries.

In addition, Indonesian textile entrepreneurs are also exploring export possibility of their products to Brazil, China, Korea and other countries.

Japan is expected to remain one of the key markets for Indonesia's textile exports and a 60 percent year-on-year increase is likely in shipments to the country this year.

Indonesia is the largest economy in the Southeast Asian region and during the last three years it has attracted several new investments and orders for textiles and garments from foreign firms that have moved their plants and orders from China and Vietnam after a steep increase in labour costs in those countries.

In Indonesia too, the problem of wage increase is significantly affecting textile companies, which directly employ nearly 1.5 million workers. Currently, wages account for 15 to 20 percent of production costs.

Fibre2fashion News Desk - India

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