In order to improve industry competitiveness especially textile and textile product (TPT) industry, machinery/equipment, which is older than 20 years, is absolutely necessary to be rejuvenated or restructured by machinery/equipment with more modern technology. The government through the Ministry of Industry considers it necessary to provide stimulus through restructuring of machinery/equipment in the textile industry in order to encourage the industry to improve its competitiveness through investments in more modern machinery/ equipment.
Harjanto, Director General of Chemical, Textile and Miscellaneous Industry of the Ministry of Industry, in Jakarta, on Wednesday (July 8), said that this year the Ministry of Industry re-allocates incentives for textile machinery revitalization program. However, Harjanto asserted that those who receive incentives are companies that never received a similar program. He asserted that incentive recipient is not the same company. The reason is that incentives should be distributed evenly to industry players. To that end, the Ministry of Industry will conduct strict selection of companies that submit request for machinery revitalization.
In addition to prioritizing textile manufacturers who have never received incentive, there will be four other stages that must be met by incentive recipients. Unfortunately, Harjanto did not explain in detail about the four stages. Last year, machinery revitalization funds budgeted by the government was absorbed by 80 companies. Harjanto predicts that the same thing happened this year. Jut like year, the Ministry of Industry does not limit the number of companies that will apply for incentive. To be sure, companies that receive incentives are limited to a maximum amount of IDR 3 billion.
Harjanto added that one of the requirements to get incentive is that machinery procurement must be new machinery. Until June 2015, the number of companies that receive incentives totaled 40 companies with absorption value of IDR 34 billion. However, Harjanto did not remember exactly the name of the company that received the incentives.
He said that to boost economic growth this year, the government did offer a lot of incentives. Cost relief to rejuvenate production machinery is also provided to small and medium enterprises (SMEs). He stated that the incentives are in the form of rebates of up to 45% for every SME. The scheme is the government provides funding for SMEs which will restructure their production machinery and equipment. To get the fund, small business must submit proposal directly to the government.
Each SME will receive different amount of incentives. The amount of incentives is tailored to the company’s scale in labor absorption. However, he could not specify the procedure for the submission of proposal for incentives. The Ministry of Industry could not yet explain the details of the budget prepared by the government. Cleary, this policy is still under discussion and will be issued in the near future.
According to him, this is an offensive strategy of the SME sector, especially in facing the ASEAN Economic Community and to support economic growth. He considered that these incentives are also important considering that currently there are around 3.4 million units of SME in Indonesia. He was optimistic that the incentives will facilitate small business to develop their business. Benefits, more workers absorbed, and increased exports.
It is said that the growth prospects of the textile industry will improve in the future, because domestic market demand and consumption continues to increase. Moreover, the textile industry’s market share is currently only about 2% of the world textile market. So, the opportunity of expanding the world market is still very large. Export market opportunities are open for industries that are able generate high quality products as well as up-to-date design with rapid supply capability. The average value of exports continues to increase, although in terms of volume it is decreasing. It shows that Indonesian products are constantly experiencing quality improvement. So, Indonesian textile products are no longer a low-end product manufacturer, but a high-end one. (E)
Business News - July 10, 2015