A small 0.62 per cent year-on-year (y/y) growth has been observed in Indonesia's textile exports in the first half of 2017. This has been supported by a 20.4 per cent (y/y) rise in knitwear exports. This modest growth being seen as a positive matter amid bleak global economic conditions which have led many countries to reduce imports of textiles.
According to Indonesian media reports, Ade Sudrajat, chairman of the Indonesian Textile Association (API), said Indonesia's downstream textile manufacturers were actually pleased with this result as it exceeded expectations amid bleak textile demand in various countries.
Data from API show that Indonesian textile exports to key markets have declined. Shipments to the USA fell 3.6 per cent (y/y), to the European Union by 4.0 per cent (y/y), and to Japan by nearly 5 per cent in the January-June 2017 period, the reports said.
Sudrajat said the apparel trade balance of Indonesia has improved markedly since the start of the year as the government had discouraged cheap imports into Indonesia to protect local industries. Meanwhile, more than 50 clothes factories have been relocated to Central Java where they are using more efficient technology. Therefore their output is also more competitively priced on the world market.
"Improved competitiveness (in terms of price and delivery) explains why demand is negative but Indonesian exports are positive," Sudrajat explained. "Moreover, foreign importers may now be more confident in Indonesia's economic and political stability."
Based on data from Indonesia's Industry Ministry, the textiles and textile product sector contributed $11.87 billion in foreign exchange earnings, or 8.2 per cent of Indonesia's total export earnings in 2016. Meanwhile, investment in this sector reached approximately $567 million in 2016, according to reports. (SV)