NATIONAL SEMINAR ON POST-PANDEMIC TEXTILE INDUSTRY RECOVERY (PART 2)

BULETIN TEKSTIL.COM/Jakarta – As a continuation of the article on the National Seminar on the Recovery of the Textile Industry Post Pandemic, we will present the presentations of the speakers as follows:

  • Liliek Setiawan (CEO of PT. Sekar Lima Pratama)
  • Teti Yani Hartono (CEO of PT. Globalindo Intimates)
  • Eko Supriatno (International Brand)

CEO of PT. Sekar Lima Pratama, Liliek Setiawan, is optimistic that the national economy will grow which will have a positive impact on the growth of the textile industry. In quarter 1/2021, the textile industry grew 12.45% compared to the previous year. Textile exports increased 27.9%, contributed by 66.6% of apparel, and 14.5% of yarn. Meanwhile, textile investment in the first quarter of 2022 increased 6.4%.

Since May 2022, Liliek sees exports and the textile transaction balance growing significantly as a signal of a “reborn” of this industry in the future.

As a foreign exchange earner and net social safety earner with a large number of workers in this industry, he said the textile industry requires 4 important factors, namely: labor, financial and capital structure, ecosystem, and regulation.

Important Issues in Employment:

  • The link between education and vocational schools versus industry needs.
  • Understanding of KPI, career path, welfare.
  • Unity of perception of the textile industry workforce by the relevant ministries.
  • Labor standardization to face globalization.

Financial and Capital Structure:

  • Understanding of the working capital cycle from upstream to downstream by banking and government.
  • Understanding Capex in the textile industry to improve the company’s competitiveness
  • Implementation of GCG and transparency of business actors
  • Government and financial sector assistance

Important issues in the ecosystem:

  • Transforming competitive energy to green energy
  • Upstream-downstream harmonization and supply chain to reduce lead time and logistics costs
  • Machinery revitalization of the entire textile sector with the industrial concept 4.0
  • Integration of textile associations from the upstream sector to the downstream sector.

The regulations set by the government are expected to contain the following provisions:

  • A holistic understanding of the ecosystem by policy makers
  • Benchmarks against competitor countries’ textile industry
  • The need for adequate incentives to revitalize and transform the textile industry

Indonesia will get an employment demographic bonus in 2025. Here, Indonesia needs to standardize its workforce for HR valuation.

According to Liliek, the textile industry and textile SMEs have absorbed 8 million workers. There are many start-up companies in the downstream sector of SMEs. They can become a growing sector if properly nurtured.

Regarding the ecosystem, Liliek emphasized the need to use green energy in the production process of the textile industry. He gave an example in Bali and East Nusa Tenggara (NTT) with sufficient sources of solar energy for industrial purposes.

Regarding solar energy, Liliek stated that limiting the capacity of 10 percent of electricity utilization by factories for the production process is a counterproductive policy.

The policy was born due to the non-absorption of electricity from the state-owned electricity company PLN due to weakening investment after the pandemic two years ago.

The future target is that textiles must focus on environmentally friendly industries in their production processes. Textiles also need to be encouraged to transform from a linear economic production process to a circular economy.

Do not forget to also pursue the export target of 2.7% of the total world exports with a value of US$ 23.7 billion.

Meanwhile, Teti Yani Hartono, CEO of PT. Globalindo Intimates, explained that at the beginning of the Covid-19 pandemic there was a decline in the textile business. However, in 2021, there was an increase of 120% orders at her company. In 2022, for example, exports of women’s underwear will decline mainly due to declining demand in America.

Teti sees several strength factors in Indonesia, especially Central Java compared to Bangladesh, Vietnam and Myanmar, such as the availability of infrastructure that strongly supports industrial activities and a large population. Currently there are 85 million people with a productive age of 19.2 million people.

One of Indonesia’s weaknesses is the policy on labor wages which are still quite high compared to other ASEAN countries, such as Vietnam, Bangladesh and Myanmar. Bangladesh, for example, has a worker wage of US$ 60, Myanmar (US$ 67), Central Java (US$ 140), and Vietnam (US$ 200).

Indonesia’s working hours are also shorter, only 40 hours/week. While in Vietnam it has reached 47 hours/week. Likewise, employee leave time in Indonesia is longer. Opportunities for Indonesian textile products to enter the markets of export destination countries are still quite good.

However, Indonesian entrepreneurs face quite serious challenges such as global economic instability and counterproductive government regulations as well as increase the burden of production costs.

Globalindo Intimates is a 100% export-oriented company with destination countries of America, European Union and Korea. According to Tety, inflation in several destination countries will reduce the purchase of garments and this could be a threat to the company. To overcome this threat, the company’s management will modify their products by implementing the industry 4.0 system in all company lines.

Teti stated the strategies that must be carried out by the company and all textile stakeholders are:

  • HR skill improvement
  • Invest in machinery to increase product capacity and quality
  • Need a good supply chain to improve efficiency
  • Transformation of the industry to become an industry that attracts investors, including: transformation of culture, products, industrial operations, technology, and company management systems.

Industry Transformation according to the speaker includes:

  • Culture: Openness to changes in the industry and development of a competent workforce
  • Products: Pay attention to trends and produce smart products to penetrate the market
  • Industrial Operations: Harmonious ecosystem and efficient supply chain
  • Technology: Increase efficiency and provide safety in use
  • Management: prioritizing industrial strategy and innovation policy towards industrial transformation.

As the final speaker, Eko Supriatno from Brand International, offered 3 solutions for companies, including:

  • Initiatives to encourage the speed up of the textile business, consist of: entrepreneurial spirit, local to local policies in the textile supply chain from the upstream sector to the downstream sector, and the availability of tier 3 in the textile industry chain.
  • Investments are directed at achieving sustainability in the textile production process in order to reduce the carbon footprint.
  • Implementing a digitalization system so that decisions in the production process can be taken quickly and in real time.
  • Innovation in terms of processes and products to reduce lead time and also improve product performance.

The difficulties faced by textile entrepreneurs today include the scarcity of containers, the Russia-Ukraine conflict, and the lock down in China. The scarcity of containers makes it difficult to ship products and also increases transportation costs.

However, this obstacle makes manufacturers think about getting a supply of local raw materials that can reduce the effect of carbon foot print. The Russo-Ukrainian war caused difficulties for almost all countries in the world. The war has caused inflation to rise, which in turn reduces people’s purchasing power of textiles. The Chinese factor is still dominant for the Indonesian textile industry. This can be seen from the high dependence on imported raw materials from China.

Eko said the investment climate in Indonesia is still not attractive to foreign investors. With Vietnam, for example, it is more interesting because Vietnam has FTAs with several countries. One of the advantages of being an FTA member, the FOB price is the same as the export destination country. For example, the FOB price of Vietnamese goods in the destination country will be around 12% cheaper, because Vietnam has an FTA with that country.

According to Eko, in the textile industry, a relationship between the upstream and downstream sectors in the supply chain is needed to encourage the acceleration of local to local conditions. The industry also needs to make policies on product innovation for the sustainability of the production process by encouraging the creation of recycled products and close loop production.

Finally, encouragement from the government and all textile stakeholders is needed to attract investment in the textile industry, including in the form of:

  • Regulation
  • Attractive investment regulations, simple and easy to implement regulations, incentives and tax holidays for investors.
  • FTA with major export destination countries such as USA and Europe
  • Good regulatory enforcement for local markets
  • Making blueprints and roadmaps for producing domestic machinery
  • Upstream and downstream sector relationships
    • Priority using local raw materials
    • JV between fabric factory and garment factory
    • Employers’ associations encourage the above alignment process
  • Stakeholder concern for sustainability
  • Fulfillment of social compliances
  • Reduction of carbon footprint in all aspects of production.

(Red B-Teks/Indra I)

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