Textile sector in chaos facing internal & external crisis

27 Dec '05

2 min read

Indonesia's textile sector is facing grave crisis as the termination agreement of Multi Fabric Agreement (MFA) signed ten years ago, has not helped local textile players to hold their ground independently.

Almost 20 percent of the textile manufacturers depended on the MFA.

The end of global textile quotas provides the stronger competitors, like China and India with an open market access.

This further affects Indonesia, as their industry is not so strong enough to compete globally.

Hence, China's exports to the EU increased by almost 50 percent while that of Indonesia sank 12.7 percent.

Exports to the EU are extremely important, as its member countries are the biggest importers of goods recording 40 percent of global imports followed by the US with 30 percent imports.

Adding to all this are the rising Chinese imports by Indonesia's domestic markets.

Tanah Abang, Central Jakarta is known as Southeast Asia's largest textile market, with daily transactions amounting to Rp150 billion (US $15.33 million).

Indonesian Textile Association (API) reported that in the first quarter this year, the Chinese imports increased tenfold over last year to $4.27 million.

Besides, the increase in the exports to the US has inflamed suspicions of transshipment.

And, the issues of illegal practices do not end there.

Illegal imports, both new and second-hand, are also a major threat to the domestic textile industry.

Price hike in power for industrial consumption and gas are other internal problems that the domestic manufacturers have to put up with.

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