The textile and textile products (TPT) industry recorded investment realization of IDR 4.63 trillion in the first quarter of 2023, up 89.41% compared to the same period last year of IDR 2.44 trillion. The increase in investment, especially in the form of Domestic Investment (PMDN), occurred amid sluggish export orders. “The jump in investment occurred due to the improving demand for textile products in the country since the beginning of last year. And those who understand the domestic market better are local investors compared to foreign investors. So that when domestic demand starts to increase, local investors can immediately respond," said Chairman of the Indonesian Filament Fiber and Yarn Association (APSyFI) Redma Gita Wirawasta, recently.
Redma added that part of the investment realized in the first quarter of 2023 was the result of ordering TPT equipment and machines since the beginning of last year. "The ordering process until the goods arrive can take a year, so if for example export orders are sluggish as they are at present, the goods will still arrive as ordered," he said.
However, Redma sees that the decline in export orders has not had much effect on the local TPT industry, because usually export-oriented industries are the result of foreign investment.
“Nowadays many factories are reducing their production due to sluggish exports, so many machines are not running. It was an opportunity for us to carry out maintenance by replacing many machines and spare parts. So the incoming investment is for the purchase of machines and spare parts, not building a new factory," he said.
Based on data from the Investment Coordinating Board (BKPM), investment realization in the form of PMDN jumped 401.25% in the first quarter of 2023 to IDR 2.95 trillion compared to the same period last year of IDR 587.93 billion. However, the realization of foreign direct investment (PMA) actually decreased by 9.4% to US$ 114.2 million from the previous US$ 126.06 million.
Responding to the decline in foreign investment throughout the first quarter of 2023, Redma suspects, this is because at the beginning of last year when the investment plan was carried out, global TPT demand had not recovered due to several things such as logistical transport disruptions, political tensions in Eastern Europe, and others.
"So foreign investors are being more careful, and indeed it turns out that even in the first quarter of 2023 export orders are sluggish," he said.
Intermediary Industry
According to Redma, most of the realized TPT investments that entered in the first quarter of 2023 came from the intermediate industry sector. Among them are from the knitting, woven and finishing fabrics sub-sector.
The investment, said Redma, is in the form of procurement of weaving machines, spinning machines and other spare parts. "Usually, from the arrival of the machine, it takes three months to install it until it is ready to operate," he said.
This, continued Redma, coincided with the momentum before the general elections began. Where usually, the demand for TPT products will increase during the people's party, namely in the form of t-shirts, banners, or other campaign support equipment.
Machine Restructuring
Plt. The Director General of the Chemical, Pharmaceutical and Textile Industry (IKFT) of the Ministry of Industry (Kemenperin) Ignatius Warsito previously said that his party continues to encourage the performance of the TPT industry in the face of global uncertainty which has an impact on decreasing exports of this sub-sector.
One of the steps taken is through a machine restructuring program to stimulate the use of equipment that is more modern, efficient and environmentally friendly so as to increase competitiveness, in accordance with the Making Indonesia 4.0 roadmap.
"This program is being implemented again after previously being used by 23 companies in 2021 and 2022. This program has been proven to increase productivity, efficiency and product quality," he said.
He said the TPT industry's performance in 2022 would still show good results amid the pressure of the global crisis. The export value of the TPT industry reached US$ 13.83 billion with a total employment of 3.65 million people. "In terms of GDP, the textile industry has grown 9.34% on an annual basis, and contributes 1.03% to national GDP," he added.
Warsito said that the machine/equipment restructuring program that focuses on the fabric perfecting and fabric printing industries targets the participation of 13 companies with a total budget in 2023 of IDR 4.7 billion. With this budget, a discounted price reimbursement of 10% of the total investment in imported machinery/equipment will be made, or 25% for domestically produced machines/equipment.
