Mandiri Bank'S Analysis Of Indonesian Textile And Garment Industry

Mandiri, a bank of Indonesia, recently released a report on the textile and garment industry. The international market, production costs and competitive advantages of the industry were analyzed as follows:

(1) the gradual recovery of the international market has not actually benefited from the Indonesia textile industry: the United States is the largest export market for Indonesia textiles, and the gradual recovery of the US economy will have a positive impact on the development of the textile garment industry in Indonesia, but the help is still unclear this year, mainly due to the fierce competition in Vietnam and Bangladesh.

The analysis shows that every 1% increase in the US economic growth rate will increase the volume of textile imports in Indonesia in the next 3 quarters. The growth rate of textile imports in Indonesia will increase to 1.5%, while the growth rate in Europe will increase by 1% in the next 2 quarters.

The recovery of European and American markets will benefit the export of textile related products in Indonesia. However, due to the increasingly fierce international competition, Indonesia textile related products can get more favorable conditions in the recovery of European and American markets, and the focus is still on the competitiveness of products.

Indonesia in 2009 and 2013 textile In the United States, the market share is 4.9% and 3.7% respectively, while the European market is 1% and 0.8% respectively. It shows that Indonesia textile has a low share in the European and American market and shows a decreasing trend.

(two) production cost The sharp increase in the number of textile industry has made it worse. In recent years, the increase in electricity price, the minimum wage and the depreciation of exchange rate have caused Indonesia textile production costs to increase sharply. The labor cost accounts for 6% and 27% of the production cost of the spinning and weaving industry and the downstream garment industry, and the minimum wage increases significantly.

The electricity cost accounts for 25% and 1% of the upstream and downstream production costs of the textile industry respectively. The electricity price increase has a greater impact on the spinning and weaving industry. The Indonesia government has again lifted the price of large and medium industrial customers from April 2014. According to the data of the Indonesia Textile Industry Association (API), a total of 48 textile enterprises were directly affected by the rising electricity price. They had to reduce the employment force, reduce the production capacity by about 20%, and lead to an increase of 7 to 10% of the price of the final garment products.

In addition, the depreciation of the Indonesia shield will also increase the production cost of the textile industry. The proportion of cotton imports from the main raw materials reaches 99.5%, and even textile products such as dyestuffs are also priced in the US dollar for domestic production. The analysis shows that the depreciation of Indonesia shield will cause an increase of about 6.91% of the textile production cost by the next 1%.

(three) API It is estimated that Indonesia's textile exports will amount to US $12 billion 900 million this year, of which about 60.9% of garments, such as shirts, T-shirts and skirts, account for about 39.1% of fabrics and yarns. In order to maintain the best level of textile exports in Indonesia, Mandiri bank suggests that Indonesia should focus on producing products with competitive edge according to market characteristics.

Based on the relevant economic models, Mandiri bank calculates and recommends that Indonesia should attack the main products in the international market respectively. The products in the US market are priority in yarn, women's wear, children's wear, men's clothing, cotton and other fiber sutures. In the European market, yarns, sutures, men's coats and gloves are the main products, while yarn and suture are the advantages in the Japanese market.

(four) in the conclusion of the report, Mandiri bank suggested that the textile industry in Indonesia should be more concerned about the choice of producing textiles with high quality and competitive advantages and have the opportunity to compete with other textile exporting countries in order to improve the international market share and the overall value of Indonesia textiles.