Realization of Absorption of Budget For Restructuring of Textile Machineries Unoptimal

The Ministry of Industry reported about unoptimal realization of absorption of budget for program of restructuring of textile machineries. Since the program was launched in 2007, absorption of budget provided by the Ministry of Industry by the Textile industry is low.

Low interest of textile manufacturers to utilize the budget assistance for machinery restructuring has encouraged the Ministry of Industry to reduce the maximum limit of budget allocation. For example, in 2009, the government allocated budget for restructuring of textile machineries at Rp. 240 billions, but the amount is reduced to Rp. 154 billions or by around 35%. This year, the Ministry of Industry increases the maximum limit of budget allocation to Rp. 177 billions or by 15% from the previous year.

Budi Irmawan, Director of Textile and Multivarious Industry of the Directorate General of Manufacturing Industry Base of the Ministry of Industry, stated that realization of absorption of budget for program of textile machinery restructuring is very low, but the government continues to increase in the number of participants from year to year. “We expect that this year, budget absorption rate will be higher than in the previous years”, Budi said.

Budi also expect that a budget of Rp. 177 billions this year could support at least 150 textile manufacturers for rejuvenation of old machineries – above 20 years of age. He explains that around 53% of textile machineries are already unfit for use as they disturb productivity. While, in fact, in the midst of global competition that demands high efficiency and effectiveness, high machinery productivity in mandatory. “If we want to win the competition, one of the requirements is rejuvenation of machineries”, Budi explained.

Budi estimated that growth of textile consumption per capita increased from 3.9 kilograms in 2009 to 6.5 kilograms 9n 2011. to balance the high consumption rate, he expects the value of domestic textile production to increase by 10.42% from USD11.32 billions to USD12.5 billions. And, one of the attempts to promote increase of production, Budi said, is by rejuvenation of machineries.

By machinery restructuring program, textile manufacturers who restructure their machineries from overseas, will receive 10% incentive from the purchase value. And, if a textile manufacturers buys machineries from domestic industries, the textile manufacturer concerned will receive 15% incentive. Budi explained that machinery restructuring program for 2011 will be started on April 1, 2011 and was expected that there would be more textile manufacturers participating in the program.