Indonesia allocates $20m for leather, footwear and textile factories
Indonesia’s Industry Ministry has allocated approximately $20.4 million for 2011, on a programme to revitalise the country’s leather, footwear and textile industries.
The director general of the Industry Ministry’s manufacturing industry division, Panggah Susanto, said that the financial aid would be distributed to 20 leather tanners and footwear producers and 150 textile firms so that they could replace their aging equipment.
“We expect that with improved technology, the firms can be more productive and efficient in their production, and therefore they will be more competitive,” he said during the programme announcement on 29 March, 2011. He said that with better production and increased output, the local firms might also win a greater share of the global market.
The share of Indonesian textile exports in the global market is expected to rise from 1.8% in 2011 to 2.5% in 2014. The revitalisation program for the textile industry was initiated in 2007, and similar programs for footwear and leather were launched in 2009. Under the programme, qualified companies will receive aid worth 10% of the total purchases of new machines.
In 2010, under the same programme, the government disbursed around $2.1 million to 24 footwear and leather firms, also less than the $2.8 million budgeted for.
The lower-than-expected amount of loans distributed was partly because many eligible companies had not been prepared to join the programme, director for textile and miscellaneous industries, Budi Irmawan, said during the programme launch.
Separately, the chairman of the Indonesian Textile Association (API), Ade Sudrajat, said that in 2010 a number of textile companies were not eligible to access the incentives due to delays in purchases. However, apart from such obstacles, he said, the machine revitalisation programme had benefitted the local textile industry.
“The 10% stimulant fund is quite meaningful for us as we mostly spend our own money to buy the machines,” he said.
Currently, Indonesia imports textile machines from China, Japan, and European countries including Germany, Belgium, Italy and Spain.
