Indonesia to benefit from Chinese textile crisis

Indonesia’s textile industry is expecting to benefit from the slowdown in the Chinese textile sector, which is going through a crisis after the Government lifted subsidies and incentives provided to the sector.

The Chinese textile sector is also finding it difficult to find skilled workforce amid rising labour costs. This provides good opportunity for the Indonesian textile industry to capitalize on the situation and compete with China made goods, according to the Indonesian Textile Association (API).

The decrease in cotton prices from last year’s record high is also a favourable aspect for the Indonesian textile sector, the API said.

The financial crisis in the EU and the US last year had no significant impact on Indonesian textile industry, as it found new markets in Asia. The sales in Indonesian domestic market have also increased last year, API added.

However, API said the high lending rates for the textile industry and the planned increase in electricity tariff from April this year are impediments for the sector’s growth.

It said the Government should find solutions to these two aspects for sustainability of the country’s textile industry, in view of the fact that the country’s textile sector can employ up to 15 percent of the total workforce.

Banks currently retain credit interest rates for the textile industry in double digits, while it is in single digit in other countries, API said.

Meanwhile, Bank Indonesia (BI) said it would encourage commercial banks to extend loans to the textile industry at competitive rates.