indonesian textile association asosiasi pertekstilan indonesia adhigraha bldg. 16 th fl. jl. jend....

INDONESIAN TEXTILE ASSOCIATION

ASOSIASI PERTEKSTILAN INDONESIA

Adhigraha Bldg. 16 th fl.Jl. Jend. Gatot Subroto, Kav. 56Jakarta 12950 – IndonesiaTel. 62-21 5272171, Fax. 62-21 5272166E-mail : [email protected], [email protected]@bpnapi.orgWebsite: www.indonesiatextile.com

Performance of Textile

Industry 2007 and

Forecast in 2008

2

NASIONAL MACROECONOMICBUSINESS CONDITION 2007

Economic Indicators 2004 2005 2006 2007 (est)

Economic Growth (%)* 5.13 5.60 5.50 6.00

Inflation (%)* 6.40 17.11 6.60 6.38

Currency (Rp/US$)* 9.360 9.830 9.020 9.130

BI Rate (%)* 7.40 12.75 9.75 8.00

Investment (Rp. triliun)* 58.30 118.28 59.29 167.92

Goods Trade Balance (USD billion)*** 25.06 27.96 39.73 39.92

Non-oil Trade Balance (USD billion)*** 21.15 26.19 37.49 39.51

Number of Unemployment (million people)**** 9.80 10.70 11.70 12.70

Number of Poverty (million people)**** 36.20 35.10 39.05 45.70

• The economic growth is still reduced by inflation and society purchasing power has yet to grow.

• No spreading out of economic growth (still focusing on the non-intensive labor sectors); thus it has yet to reduce unemployment and poverty.

• Performance of the real sectors (trade balance) are still hampered, and it has yet to be able to give good impact on the economic growth.

Source : BI*, BKPM**, BPS***, Lipi**** procecced

3

Domestic and World Textile ConsumptionBUSINESS CONDITION 2007

Total People Consumption * US$ 268,17 billion

Finished Clothes Cons. (2,5%)** US$ 6,71 billion

Volume conversion (US$ 5,5/kg)** 1.220.000 ton

Indonesia Textile Consumption

1013

1220

836882820

0

200

400

600

800

1000

1200

1400

2003 2004 2005 2006 2007

Domestic Finished Clothes Consumption 2007 (Est.)

Source: BI*, BPS** processed

• By value, finished clothes consumption declined but by volume the domestic consumption increased. Consumption per capita reached 5.3 kg (in 2006: 4,6kg/capita)

World Textile Consumption (million ton)

4748.2

49.4

54.4

56

42

44

46

48

50

52

54

56

58

2003 2004 2005 2006 2007

Source : WTO, Otexa, Eurotex processed

• World consumption increased by 3%.

• World consumption per capita in 2007 about 8,48 kg (in 2006: 8,37kg/capita)

4

National Textile Production &Model of Distribution 2007 (000 ton)

PERFORMANCE OF TEXTILE INDUSTRY 2007

Indonesia Textile Export (by region), 2007

(US$ 10,06 billion)

US43%

EU16%

Row36%

Japan5%

Production : 800 Export: 220(27,5%)

Impor : 705

Fiber :

Production: 1680 Export: 800(47,6%)

Import: 90

Yarn:


Import: 110

Fabric:


Import: 20

Garment :Production : 120 Export: 110

(91,6%)Import: 68

Other Products:

Production: 230

SMEs Garment :

DOMESTIC MARKET (Total Sales: 358.000 ton worth US$ 1,97 billion)

Source: API (processed)

•Indonesia is still relying on export market by USA, EU and Japan as the main export destination country.

5

Trade Performance (Export-Import)

Indonesia Textile Trade (US$ billion)

6.8

8

7.0

3

7.6

4 8.6 9.

45

10.0

6

1.8

2

1.6

7

1.7

2

1.6

1

1.5

8

2.0

5

5.0

6

5.3

6

5.9

2 6.9

9

7.8

7

8.0

1

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2002 2003 2004 2005 2006 2007(est)Total Export Total Import Balance

Sub-Sector Export Import

Value (US$ billion) Volume (000 ton) Value (US$ billion) Volume (000 ton)

Fiber 0,3 (15% increase) 220 6% increase) 0,98 (24% increase) 705 (increase 18%)

Yarn 1,89 (6,1% increas) 800 (1% increase) 0,23 (17,8% decrease )

90 (decrease 29%)

Fabric 1,44 (2% decrease ) 320 (0,6% decrease ) 0,44 (22% increase) 110 (increase 5,7%)

Garment 5,97 (13,2% increase) 380 (1% increase) 0,15 (200% increase) 20 (increase 81%)

Other product 0,46 (15% increase) 110 (10% decrease ) 0,25 (increase 177%) 68 (decrease 21%)

TOTAL 10,06 (6,4% increase) 1.830 (2,6% decrease ) 2,05 (increase 29,7%) 993 (increase 4,6%)

Trade Performance 2007 (Compared to 2006)

• Export value increased by 6.4% (has yet to meet growth target by 10% annually).

• Export volume declined and the increase of export was driven by increase of unit price.

• Importing clothing drastically increase.

• Trade balance totaled US$ 8.01 billion (increased by 1.8% compared to 2006).

• The world trade value of 2007 reached to USD 546 billion, and Indonesia only dominated 1.8% of the total market share.

Source: BPS (est) processed

Source: BPS


6

Domestic Market Condition

Domestic Market Share 2007 (Total: 1.220.000 ton)

Ilegal import71%

Import7%

Local Supply22%

Garment Consumptionin Domestic Market (000 Ton)

557

658

303

456

270

30

44

51

88

238

195

489

506

862

25

0 200 400 600 800 1000 1200

2003

2004

2005

2006

2007

Domestic product Legal Import ????

Domestic Sales (000 Ton)

129 193

21

150

30

484

511

282

306

613

658

303

456

230 2

60

0

100

200

300

400

500

600

700

2003 2004 2005 2006 2007

Med-Large Industry Home Industry Total Sales

Source : BPS, Ministry of Industry, BI, API Compiled

• Domestic market consumption increased by 20% to 1.22 million ton.

• The local products sales in domestic market declined by 42.9% to 260.000 ton and 22% share (far from the target of 75%).

• Import volume of clothing and other products increased by 72%.

• Import products dominated domestic market by 70% share to 862.000 ton.


7

Position in Int’l Market

27

.77

4.7

8

4.3

7

3.7

9

3.6

0

2.7

5

2.6

9

2.1

0

2.0

6

1.8

9

Chi

na

Mex

ico

Indi

a

Vie

tnam

Indo

nesi

a

Ban

glad

esh

Pak

ista

n

Hon

dura

s

Cam

bodi

a

Can

ada

Bil

lio

n (

US

D)

Bangladesh, 3.35

Pakistan, 3.28

Honduras, 2.55

Cambodia, 2.51

Canada, 2.3

China, 33.84

Indonesia, 4.39 Vietnam,

4.62India, 5.33

Mexico, 5.82

INDONESIA POSITION IN USA MARKETJANUARY-OCTOBER 2007

% SHARE

Indonesia Textile Export to the US (US$ million)

1,9762,376 2,620

3,081

3,9304,320

2002 2003 2004 2005 2006 2007 (est)

• Export to the US grew by 10% to US$ 4.32 billion.

• Indonesia’s share in the US market was 4.39% (in 2006 was 4.21% share).

• The position declined 1 level to 5th, under Vietnam by share 4.62% (in 2006: 3.74%).


8

18.4

1

8.68

4.43

3.17

1.99

1.78

1.64

1.10

1.06

0.99

Chi

na

Tur

key

Indi

a

Ban

glad

esh

Tun

isia

Mor

occo

Pak

ista

n

Indo

nesi

a

Sw

itzer

land

Hon

gKon

g

Bil

lio

n (

Eu

ro)

Bangladesh, 2.90

Tunisia, 1.80

Morocco, 1.60

Pakistan, 1.50

Indonesia, 1.00

Switzerland, 1.00

HongKong, 0.90

China, 16.90

Turkey, 8.00

India, 4.10

INDONESIA POSITION IN EU-27 MARKETJANUARY-AUGUST 2007

%SHARE

Indonesia Textile Export to EU (US$ million)

1,558 1,586

2,232

1,6981,881

1,650

2002 2003 2004 2005 2006 2007(est)

• Despite EU import increased by 1.2% but Indonesia export to the region declined by 1.2%.

• Indonesia’s share is 1% and the position is in the 8th in the EU countries.

PERFORMANCE OF TEXTILE INDUSTRY 2007 Position in Int’l Market

9

Indonesia Textile Export to Japan (US$ million)

344

426480 474 494 504

2002 2003 2004 2005 2006 2007(est)

• In 2007, Japan textile import increased by 3.3% and Indonesia export rose by 2.1% to US$ 504 million.

• Indonesia’s market share in 2007 increased to 2.9% (2006: 1.8% share).

2,44

9

91 60 58 56 45 37 37 17 12

Ch

ina

PR

Ind

on

esia

Ko

rea

Rep

Tai

wan

US

A

Ind

ia

Th

aila

nd

Vie

tnam

Pak

ista

n

Mal

aysi

a

bil

lio

n Y

en

China PR, 76.6

Taiwan, 1.8

Korea Rep, 1.9

Indonesia, 2.9

USA, 1.7India, 1.4

Vietnam, 1.2

Thailand, 1.2

Pakistan, 0.5

Malaysia, 0.4

INDONESIA POSITION IN JAPAN MARKETJANUARY-NOVEMBER 2007 *)

% SHARE

Note: *) Excl. EU-25

PERFORMANCE OF TEXTILE INDUSTRY 2007 Position in Int’l Market

10

Indonesia Textile Export to ASEAN(US$ billion)

0.54 0.58 0.600.67 0.66

0.33 0.34

0.000.100.200.300.400.500.600.700.80

2002

2003

2004

2005

2006

2006

*)

2007

*)Data : *) Jan-JunIndonesia Textile Import

from ASEAN (US$ billion)

0.10 0.09

0.17 0.18

0.22

0.05 0.06

0.00

0.05

0.10

0.15

0.20

0.25

2003

2003

2004

2005

2006

2006

*)

2007

*)

Textile Trade Balance Indonesia -ASEAN (US$ billion)

0.440.49

0.430.49

0.44

0.27 0.28

2003

2003

2004

2005

2006

2006

*)

2007

*)

.

Inter-ASEAN Textile Trade

*) Jan-Jun

Indonesia Export to ASEAN slowly increased by 3.3% and the import fast increased by 15%, mainly from Thailand and Philippines.


11

Impact on National Economic

6.8

8

7.0

3

7.6

4

8.6 9

.47

10

.06

1.8

2

1.6

7

1.7

2

1.6

1

1.5

4

2.0

5

5.0

6

5.3

6

5.9

2 6.9

9

7.9

3

8.0

1

0.00

2.00

4.00

6.00

8.00

10.00

12.00

2002 2003 2004 2005 2006 2007 (est)Total Export Total Import Balance

TEXTILE CONTRIBUTION AGAINST THE GDP VALUE 2007

Net Export : US$ 8,01 billionDom. Sales : US$ 1,97 billionInvestment : US$ 0,33 billion Total : US$ 10,31 billion

GDP 2007 : US$ 423,69 Milyar

INDONESIA TEXTILE TRADE BALANCE(US$ billion)

Pulp dan paper13.37%

Oil palm16.10%

Rubber products17.92%

Furniture7.90%

Shoes & Leather products

5.16%

Textile24.33%

Non-oil1.67% Other

6.87%

Mining products

6.68%

SHARE SURPLUS OFINDONESIA TRADE 2007

(TOTAL US$ 39.92 BILLION)

Manufacture

12%

Agriculture44%

Other18%

Retail, Restaurant

& Hotel20%

Mining1%

Construct5%

SHARE OF WORKER IN TEXTILE INDSUTRY AGAINST THE NATIONAL INDUSTRY

(97,58 MILLION)

15%Textile & Garment

(1,841,520)

• Biggest foreign exchange earner from non-oil sector (2,4% to GDP)

• Export surplus is always above US$ 5 billion annually• The biggest absorber of workers in manufacturing industry


12

TEXTILE BUSINESS CLIMATE 2008/2009:CHANCE, CHALLENGE, OBSTACLE AND

WORKING AGENDA IN TEXTILE INDUSTRY

13

National & World EconomicBUSINESS CLIMATE FORECAST 2008/2009

If target of 6.8% economic growth in 2008 can reachable and inflation can be reduced by 5%, the society’s purchasing buyer would increase. At any rate, government must focus on the sector driven to increase the economic growth. If not focusing on the increase of the manufacturing sector, the economic growth would be in appearance only since it cannot reduce number of unemployment and poverty.

Along with the increase of the world crude oil price reached to about USD 100/barrel, the world economic is expected to slow down. It will impact on the growth of trade volume and value (export-import. The decline of growth in the importing countries will also make the trade dropped.

14

Textile Consumption & Supply-Demand

Indonesia Textile Consumption

(000 ton)

1,3001,2201,013

836

0

500

1000

1500

2005 2006 2007 2008

• Optimistic assumption, if government can increase society’s purchasing power, the textile consumption will grow to about 1.3 million ton in 2008.

The World Textile Consumption (million ton)

49.4

54.456 56.5

45

50

55

60

2005 2006 2007 2008

Source: WTO, Otexa, Eurotex processed

• Despite not significant, the world textile consumption is predicted to remain grow and would be 56.6 million ton in 2008 by USA and EU as the main market.

BUSINESS CLIMATE FORECAST 2008/2009

15

World & Domestic Textile Market

The World Textile Trade (US$ billion)

0

200

400

600

800

2001 2005 2006 2007 2008est

2009est

Textile Clothing

• Despite consumption grows, the illegal import will disturb market share of local products in domestic market. For that, share in the domestic market is predicted to remain under 25%.

• Growth of the world textile consumption will impact on the trade value. In 2008, the world textile trade will reach to US$ 565 billion.

• China and India are still dominating world textile trade. China will be free from the safeguard measure and to be member of WTO. Indonesia will face other potential competitor such as Vietnam and Kampuchea those get rapidly growth in the garment industry.


16

To increase competitiveness in the domestic and export, the government should focus on:

• Having trade cooperation (FTA) with the countries to be main export destination like USA and EU, like with Japan (IJ-EPA).

• Activating ITPC as marketing agent of the national industry in cooperates with related associations relating to the effort to have market penetration.

• Facilitating promotion like exhibition and other promotional activities in the countries to be main textile export destination, such as Textile World (EU), Magic Show (USA), ITAF, IFW, etc.

• Handling problem of unfair trade competition, in which import goods can be easily imported and circulated to the domestic market.

BUSINESS CLIMATE FORECAST 2008/2009 World & Domestic Textile Market

17

Investment & Machinery Modernization

• Despite banking is still focusing on the government obligation savings; however, some banks begins allocating funds to the textile industry.

• Program of Increasing Machinery Technology in the textile industry drive textile manufacturers to modernize machines and expand production capacity. In 2007, the investment increased to US$ 300 million. This investment will impact on the performance of textile industry in the future.

• In 2008, it is expected that there would be increase of investment of more than US$ 500 million. The fund is allocated to modernize machines in the sectors of spinning and weaving and increase production capacity in knitting, finishing, and weaving.

Restructuring/Modernization

- 2.5 million spindle- 200,000 shuttle loom

Expansion

- 20 Man Made Fibre unit- 2.4 spindle- 63,500 shuttle-less loom- 16,600 knitting mach.- 221 finishing unit- 179,000 sewing mach

Increase of Production Capacity (million ton)

Fiber : 1.04 1.76Yarn : 2.30 3.30Grey Fabric : 1.75 2.50Finish Fabric : 1.52 2.50Garment : 0.59 0.95

Target on Production CapacityITPT National 2010


18

Availability of Energy Supply

• The energy supply from PLN has yet to meet the industry’s demand.

• The electricity base rate (4 cent/kwh) is competitive enough, but the applied rate (due to peak season program, multiuse, public lighting and VAT) makes no longer competitive (8 cent/kwh).

Benchmark Average Applied Electricity Rate For Industry 2005 (cent/kwh)

Indonesia : 8 China : 7,6 Bangladesh : 3 Mesir : 3 Pakistan : 6,6 Vietnam : 7

Source : World Bank, ASEAN Sec, API Compiled.

Energi Supply In Textiles Industry 2010

PLN (State Own)30%

Fuel Own Power Plant5%

Gas & Coal Own

Power Plant65%

Energi Supply In Textiles Industry Before 2005

PLN (State Own)90%


Gas & Coal Own

Power Plant3%

Energi Supply In Textiles Industry 2006-2007

PLN (State Own)75%


Gas & Coal Own

Power Plant19%

Source : API Compiled

Textile industry has begun doing energy diversification by building private power plant using coal and gas as fuel source


19

Giving priority to primary energy (gas and coal) to meet the domestic energy demand.

Supporting industry to have energy diversification by making sure continuity of gas and coal supply to the industry.

Increasing efficiency for the PLN performance and building new power plant using domestic source of primary energy; thus it can meet industry’s need by competitive price.

Government should focus on:

BUSINESS CLIMATE FORECAST 2008/2009 Availability of Energy Supply

20

• The labor system cannot drive increase of workers’ productivity; thus it declines competitiveness.

• The Act No. 13/2001 especially for minimum wage, outsourcing, overtime, and severance pay, is still burdening industry (un-friendly business policy).

• The Work Training Center has yet to be maximally used to increase workers’ productivity.

Average Cost for Labor 2007 (US$/hour)

Indonesia : 0,76 China : 0,55 Vietnam : 0,35India : 0,60 Pakistan : 0,40 Bangladesh : 0,35

Labor Productivity Rank 2005Thailand : 27 Malaysia : 28 Korea : 29China : 31 Filipina : 49 Indonesia : 59

Source : Min. Of Labor compiled from any other source

Company does training to increase workers’ productivity, either done internally or makes cooperation with the training

institutions

LaborBUSINESS CLIMATE FORECAST 2008/2009

21

Revising the Act No. 13/2001 mainly in minimum wage, outsourcing, overtime, severance pay to make business more and more favorable.

Reactivating Work Training Center (BLK) as training institution to increase workers’ skill and productivity.

Supporting training and education centers to increase workers’ productivity. The centers can make cooperation with industry in arrange model of training and education.

Labor

API in cooperates with government should focus on:


22

• The THC rate is more expensive compared to the ASEAN countries.

• Access to seaports damage and traffic jam (cost and time of transportation is more and more increase).

Terminal Handling Charge Rate (US$)

Country2004 2005

20 feet 40 feet 20 feet 40 feet

Indonesia 150 240 97 150

Singapore 110 160 110 160

Philippine 78 N/a 78 N/a

Malaysia 76 N/a 76 N/a

Thailand 40 N/a 40 N/a

Source: Indonesian Shipowner Association (DEPALINDO)

Infrastructure

High-cost economy in transportation sector (from, in and to the seaports):


23

Increase productivity and efficiency of the seaport performance to make quicker services and reduce THC of 20-feet under US$ 70/container and 40-feet under US$ 100/container.

Improving access from and to the seaport to reduce traffic jam.

Drive investment in transportation sector (train) from industrial estates to the seaport. It will make transportation faster, safer and more competitive price.

Infrastructure

To handle the problems in infrastructure, API and government should focus on:


24

TARGET OF THE TEXTILE INDUSTRY 2008:By above estimation and forecast, performance of the textile industry in 2008 is targeted:

Investment aimed at modernizing and expanding production will increase 5% of production capacity; thus, the production utilization is targeted to be above 80%.

By new investment, it is expected there would be growth by 5% of number of workers.

Import growth in the US, IJ-EPA and AJ-EPA, correction of the RMB value against the USD, political condition in Pakistan, industrial growth of home textile in Asia, and accurate promotional strategy are expected to drive growth by 10% of export.

The domestic market will be difficult to reach. At any rate, if the national textile industry can seize market share of uniform, the local products are expected to dominate 60% of the domestic market.

---- T H A N K Y O U ---

25

Forecast of textile export by sub-sector in 2008 as follows:

0

2000

4000

6000

8000

10000

12000

2005 2006 2007 2008Forecast)

Forecas t of Textile Export Value in 2008

Fiber Yarn Fabric Garmen Other TOTAL

Total Export Growth : 10%Fiber export growth : 0%Yarn export growth : 10%Fabric export growth : 5%Ready-made wear : 12%Other textile export growth : 6%

Forecast of Textile Export Value of 2008Total : US$ 11,06 billionFiber Export value : US$ 0,3 billionYarn export value : US$ 2,08 billionFabric export value : US$ 1,51 billionReady-made wear export : US$ 6,68 billionOther : US$ 0,49 billion

TARGET OF THE TEXTILE INDUSTRY 2008:

26

T H A N K Y O UINDONESIAN TEXTILE ASSOCIATIONINDONESIAN TEXTILE ASSOCIATIONASOSIASI PERTEKSTILAN INDONESIAASOSIASI PERTEKSTILAN INDONESIA

Adhigraha Bldg. 16 th fl.Jl. Jend. Gatot Subroto, Kav. 56

Jakarta 12950 – IndonesiaTel. 62-21 5272171, Fax. 62-21 5272166

E-mail : [email protected], [email protected]

indonesian textile association asosiasi pertekstilan indonesia adhigraha bldg. 16 th fl. jl. jend....

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