Govt to modernize textile & leather industry

12 May '10

2 min read

In the 2010 budget, government of Indonesia has allocated Rp 9 billion for modernization of old textile and leather machineries in Small and Medium Enterprises (SMEs), informed a government official.

Textile and leather products manufactured in SMEs fail to strongly compete in the market due to their aging machineries, which are the biggest obstacle in the development of these SMEs.

Aging machinery reduces the efficiency as well as the productivity of these enterprises, which affects the overall quality of their products. Moreover, small and medium scale textile and leather industries are finding it difficult to access financial institutions and source funds to purchase new machinery.

Modernization of machineries in these industries comes at a time when there is tough competition in the local market due to entry of cheaper textile and leather products from foreign countries.

The textile and leather industries are supposed to modernise machineries of about 80 to 100 factories per year, under a six-year restructuring program that was implemented in 2009 for the first time. This program was to help modernize at least 50 percent of the plants by the year 2014.

The government, under this six-year program, will offer 25 percent funds to the industries to import new machineries and 30 percent funds will be offered for acquiring new machines from the local machine manufacturers, in the price range of Rp 40 million to 2 billion each.

Fibre2Fashion News Desk - India

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