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Poor incentives & infrastructure impede FDI in textile sector
Sep '10
Unavailability of government incentives and poor infrastructure in Indonesia is dissuading foreign textile manufacturers to make investments in the country.

A number of Singaporean and Chinese entrepreneurs were interested in shifting their textile factories to Indonesia, but unavailability of basic infrastructure, including, electricity, gas supply and roads acted as stumbling blocks.

Many businessmen, particularly from Singapore having their factories in China and Korea, had expressed serious interests in moving to Indonesia, but infrastructural issues made them reluctant to do so. Also, the potential investors think twice before investing in Indonesia due to lack of incentives from government, said an expert.

Infrastructural issues didn't allow many factories to employ advanced environmental management systems which impede growth of textile industry. The country needs additional investments immediately in a bid to hire more workers.

In February this year, Indonesia's workforce was estimated at 171.02 million over last year's 168.26 million. But, just 92 percent i.e. 116 million of these workers were employed.

As garment industry offers employment to more people and requires less time to establish factories, the textile industry insiders of the country prefer investments in garment industry rather than textile industry.

There are around 1.34 million employees in textile industry of the country which grew steadily in recent years. With the export of textile products worth $4.95 billion, the textile industry of the country accounted for 17.4 percent of total exports during initial six months of current year, recording a growth of 8.7 percent over the same period last year. The markets like US and South Korea.

It has been expected that this year, the overall export value for the textile sector would be over $10 billion. This value for textile sector has increased consistently since 2005.

It improved from $8.6 billion in 2005 to $9.45 billion in 2006, $9.81 billion in 2007, $10.41 billion in 2008 and plunged slightly to $9.26 billion in the year 2009 on account of the global economic downturn.

Fibre2fashion News Desk - India

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