Indonesian textile sector to invest $230 mn this year

09 May '15

2 min read

Indonesia expects to receive 3 trillion rupiah ($230.15 million) in investment that will go to the textile and garment industry this year despite rising challenges by way of new electricity prices and increase in labor costs, one of the country’s leading newspapers has reported.

A sizeable portion of one trillion rupiah ($77 million approx) will derive from a local firm, while the majority will come from foreign investors, particularly from China, South Korea and Taiwan, according to Indonesian textile association (API) chairman Ade Sudrajat.

“Most of the investment will be poured to Central Java,” The Jakarta Post quoted Ade as saying on the sidelines of a recent seminar hosted by the investment coordinating board.

The manufacturing facilities to be financed by the planned investment were to produce apparel as investors anticipated greater market access that Indonesia was targeting through potential trade agreements with key buyers, such as the EU, he said.

Without free trade deals, Indonesian textile and garment producers are currently being charged duties ranging from 11 to 30 per cent to main export destinations, including the EU and US. The trade arrangement may push down levies to as low as zero per cent, resulting in an enhanced edge of traded goods in terms of price.

Indonesia is preparing for talks on a long-delayed comprehensive economic partnership agreement with the EU, which is expected to boost the competitiveness of its products to the 28-member bloc.

Indonesia has seen its shares decline in textile trading with major partners from 2007 to 2013, excluding Japan, with which it has inked an economic partnership agreement, according to data from the business group. (SH)

Fibre2fashion News Desk - India

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