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
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