Garment exports doing well despite global crisis next year

The Jakarta Post, Jakarta | Mon, 12/15/2008 10:36 AM  

Thanks to investment worth around Rp 4 trillion (US$363 million), garment-making businesses are expected to grow by 11.4 percent by year-end, and another 10 percent next year. 

Garments account for 60 percent of Indonesia's textile and textile products (TTP). 

Garment exports are projected to reach $6.4 billion this year, from $5.82 billion in 2007, said Kurnia Saputra, a board member of Garment Partnership Indonesia, an initiative by the USAID-financed SENADA to help raise industry competitiveness. 

Growth in garments will be higher than the forecast 8 percent increase in the total exports of TTPs, which will grow from $10.3 billion in 2007 to an estimated $10.81 billion this year, Kurnia said on the sidelines of a link-and-match meeting between garment producers and buyers held by SENADA last week. 

Although several textile companies have had to lay off workers, garment makers have been doing well and have absorbed another 50,000 workers this year, according to Redma Gita Wirawasta, executive director of Indotextiles research center. 

There are already more than 1 million workers in the garment industry. 

"This (increase) was pushed by an increase in investment this year of Rp 4 trillion, which was the highest investment in the industry for the past five years," Redma said. 

"This gives us optimism about next year's projection of garment exports, which will likely grow by another 10 percent," he said, adding that "there have been no layoffs in garment companies this year". 

Major destinations of garment exports are the United States, contributing 26 percent, the European Union (12 percent), ASEAN (5 percent) and Japan (3 percent). 

Indonesia's garments account for only 3 to 4 percent of the world's total, Kurnia said. "But we can strengthen our global position as an important garment industry player by pushing for greater compliance with global manufacturing practices." 

Complying with good industrial practices such as meeting requirements for safety and working conditions will boost sales because international buyers will have no doubts about dealing with complying companies, he said. 

Total sales of TTPs in 2008 are estimated at $16.25 billion, a slight increase from last year's $15.09 billion, with the domestic market absorbing around 33 percent of the whole. 

Mukhtar Ahmed, vice president of OSG LiFung Indonesia, said that globally Indonesia was ranked ninth among TTP exporters and 11th among garment exporters. 

Ahmed said that despite the current global crisis, the United States and Europe would remain major destinations for Indonesian garment exports, while countries in the Middle East and the former Soviet Union would act as buffer markets. 

"The weaknesses of the Indonesian garment industry lie in communication and marketing and also in research and development," he said. (iwp)