Indonesia is on the textiles manufacturing fightback. Two property developers - Jababeka and Singapore-based Sembcorp Development – are teaming up with the government to build an autonomous textile manufacturing facility inside the Kendal Industrial Complex (KIK) in Central Java.
Designed to reawaken the sleeping domestic textile industry, Jababeka chairman -
S.D. Darmono - told the Jakarta Post that the concept of the complex would
mirror the complex in West Java, but would be used solely for textiles.
“The industrial complex in Bekasi has been
proven to drive competitiveness,” Darmono said at a discussion in Central
Jakarta on Monday.
The KIK project is currently being built on a
2,700-hectare plot of land. But the textile cluster will take up 630 hectares
of land worth $29.5 million. And, as the popularity of the space grows, so too
will the size - according to the number of tenants.
The Indonesian textiles industry is facing increasing labor costs, limited raw materials and high lending rates. So, the local industry would benefit from a more skilled workforce and shift in technology upgrades. But this involves training and research.
“As such, we want to build a training and
research center in the complex,” he said.
Another benefit to the new complex is proper housing for workers. Jababeka is collaborating with the government – via state-owned enterprises - to develop worker residences for textile workers to lease.
The Industry Ministry’s director general for the
textile and chemical industry, Harjanto, said that the government had always
been supportive of the development of labor intensive industries like the
textile industry.
The government was currently working to help
such industries by providing training for workers and conducting promotion
overseas, Harjanto added.
The Facts
Indonesia’s main export destinations for textile and garments are the US, Japan, Turkey, Germany and South Korea. But the country’s share in textile trading with major partners, excluding Japan, declined from 2007 to 2013, as neighboring countries such as Vietnam and Cambodia gained ground with cheap labor and more immediate resources.
Domestic challenges are on the rise for Indonesia’s textile industry. Local textile producers depend almost entirely on imported cotton, since domestic farmers are unable to satisfy even 1% of national demand.
This puts yarn spinners at the mercy of fluctuating global prices, forcing a number of small businesses to close up shop.
Cotton is sourced from a range of countries – led by Brazil, the US and Australia – to be spun in Indonesia and then either exported as yarn or further processed into cloth and garments. The principle buyers of yarn from Indonesia are China and Japan, while textiles and textile products go mostly to the US, the EU and Japan.
The Indonesian Textile Association (API) has reported that at least 18 firms in Java have ceased operations, laying off around 30,000 workers. The situation could worsen and the industry may further lay off up to 50,000 workers by August or September, according to the API.
The KIK project hopes to counteract both the global and local issues impacting Indonesia’s textile sector. As yet, the facility does not have a target date for completion.