Beginning this year, textiles will gradually become the largest export segment in Indonesia, overtaking the commodity-based segment, predicts a report published recently by the Hongkong and Shanghai Banking Corporation (HSBC).
HSBC’s Indonesia head for global trade and receivable finance, Nirmala Salli, said the growth of the Indonesian textile and apparel industry would be driven by recovery in the European market, The Jakarta Post reported.
Ms. Nirmala said Indonesian textile and garment exports did not grow significantly for the past three years, solely because of the slow economic recovery in Indonesia’s main export markets such as Europe and the United States. But now there is an improvement in the global market, particularly in the UK and the US, she added.
She informed that many banks still have credit exposure in the textile sector, and added that further development of the sector will lead to greater investment, which would impact bank financing.
The HSBC’s Global Connections Report, published this month, shows Indonesia’s Trade Confidence Index (TCI) at 119, against the neutral benchmark of 100. Although the TCI had dropped from the previous 127, it is still positive for Indonesia.
According to Ms. Nirmala, the economic improvement in China and India will lead to a greater demand for Indonesian products. She said the world’s two most populated countries are expected to become the first and second top destinations for exports by 2030, while Japan, Malaysia and Singapore would occupy the third, fourth and fifth positions, respectively.