traditional market: 1. usa 2. singapore 3. japan 4. china 5. malaysia

The Ministry of Trade of the Republic of Indonesia

TRADITIONAL MARKET:

1. USA 2. SINGAPORE 3. JAPAN 4. CHINA 5. MALAYSIA 6. REPUBLIC OF KOREA 7. THAILAND 8. TAIWAN 9. AUSTRALIA 10. EUROPEAN UNION

ACTION PLAN OF THE MAIN PROGRAM STRATEGIC TARGET OF MINISTRY OF TRADE:

1. STABILIZATION AND STRENGTHENING THE DOMESTIC MARKET

2. EXPORT AND INTERNATIONAL COOPERATION 3. BUREAUCRATIC REFORM AND GOOD GOVERNANCE

EMERGING MARKET/NON TRADITIONAL MARKET:

1. INDIA 2. AFRICA 3. LATIN AMERICA 4. MIDDLE EAST 5. CENTRAL ASIA 6. EASTERN EUROPE

Jakarta, 22 October 2013

Gusmardi Bustami

Ministry of Trade of The Republic of Indonesia

INDONESIA’S TEXTILLE AND TEXTILLE PRODUCT AND FOOTWEAR

The Ministry of Trade of the Republic of Indonesia 3

EXPORT OPPORTUNITIES

EXPORT AND IMPORT PERFORMANCE

outline

NATIONAL EXPORT AND IMPORT PERFORMANCE OF TEXTILLE AND TEXTILLE PRODUCTS AND FOOTWEAR

CHALLENGES AND OPPORTUNITIES

EXPORT AND IMPORT PERFORMANCE

4


Indonesia’s Trade Balance

• According to the Trade Data, Between January to August 2013, the trade performance was declined due to contraction on international trade.

• The trade balance betweenJan-August 2013 recorded a deficit of US$ 5,5 billion. That deficit was triggered by oil and gas trade deficit of US$ 8.52 billion Billion (previous year was only US$ 1.63 million), While non oil and gas trade recorded surplus of US$ 2.96 Billion (previous year recorded US$ 2.11 billion).

Million (US$)

NO Description 2008 2009 2010 2011 2012 TREND(%)

2008-2012

Jan-Ags* CHANGE(%)

2013/2012 2012 2013

I E X P O R T 137.020,4 116.510,0 157.779,1 203.496,6 190.020,1 12,88 127.091,3 119.317,4 -6,12

- OIL & GAS 29.126,3 19.018,3 28.039,6 41.477,0 36.977,3 13,39 25.872,2 21.384,0 -17,35

- NON OIL &

GAS 107.894,2 97.491,7 129.739,5 162.019,6 153.042,8 12,83 101.219,1 97.933,4 -3,25

II I M P O R T

**) 129.197,3 96.829,2 135.663,3 177.435,6 191.689,5 14,97 126.617,5 124.856,0 -1,39

- OIL & GAS 30.552,9 18.980,7 27.412,7 40.701,5 42.564,2 15,33 27.509,4 29.909,5 8,72

- NON OIL &

GAS 98.644,4 77.848,5 108.250,6 136.734,0 149.125,3 14,91 99.108,1 94.946,5 -4,20

III TOTAL 266.217,7 213.339,3 293.442,4 380.932,2 381.709,6 13,89 253.708,8 244.173,4 -3,76

- OIL & GAS 59.679,2 37.999,0 55.452,3 82.178,6 79.541,4 14,41 53.381,7 51.293,5 -3,91

- NON OIL &

GAS 206.538,6 175.340,2 237.990,1 298.753,6 302.168,1 13,81 200.327,2 192.879,9 -3,72

IV BALANCE 7.823,1 19.680,8 22.115,8 26.061,1 -1.669,4 0,00 473,8 -5.538,6 -1.269,03

- OIL & GAS -1.426,6 37,6 626,9 775,5 -5.586,9 0,00 -1.637,2 -8.525,5 420,73

- NON OIL &

GAS 9.249,7 19.643,2 21.488,9 25.285,5 3.917,6 -13,63 2.111,0 2.986,9 41,5

Source: Indonesian Statistics

Development of Export and Import

• Export Total on Jan-Aug2013 was US$ 119 billion, decline 6.12% (year on year/yoy).

• Whereas import total on Jan-Aug was US$ 124 billion, decline 1.39% (yoy): oil and gas sector increased 8.72% and non oil and gas declined 4.20%.

• Indonesia’s foreign trade performance was pressed due to international situation. The increase in oil price and the large deman of oil and gas products in Indonesia had contributed the increase of trade deficit. On the other hand, the import demand from Indonesia’s trading partner, especially the traditional ones has not yet recovered.

6


Million (US$)

NO Description 2008 2009 2010 2011 2012 TREND(%)

2008-2012

Jan-Ags* CHANGE(%)

2013/2012 2012 2013

I E X P O R T 137.020,4 116.510,0 157.779,1 203.496,6 190.020,1 12,88 127.091,3 119.317,4 -6,12

- OIL & GAS 29.126,3 19.018,3 28.039,6 41.477,0 36.977,3 13,39 25.872,2 21.384,0 -17,35

- NON OIL &

GAS 107.894,2 97.491,7 129.739,5 162.019,6 153.042,8 12,83 101.219,1 97.933,4 -3,25

II I M P O R T

**) 129.197,3 96.829,2 135.663,3 177.435,6 191.689,5 14,97 126.617,5 124.856,0 -1,39

- OIL & GAS 30.552,9 18.980,7 27.412,7 40.701,5 42.564,2 15,33 27.509,4 29.909,5 8,72

- NON OIL &

GAS 98.644,4 77.848,5 108.250,6 136.734,0 149.125,3 14,91 99.108,1 94.946,5 -4,20

III TOTAL 266.217,7 213.339,3 293.442,4 380.932,2 381.709,6 13,89 253.708,8 244.173,4 -3,76

- OIL & GAS 59.679,2 37.999,0 55.452,3 82.178,6 79.541,4 14,41 53.381,7 51.293,5 -3,91

- NON OIL &

GAS 206.538,6 175.340,2 237.990,1 298.753,6 302.168,1 13,81 200.327,2 192.879,9 -3,72

HS URAIAN BARANG USD JUTAGrowth (%,

YoY)Share (%) HS URAIAN BARANG

USD

JUTA

∆ USD

JUTA

Growth

(%, YoY)

15 Lemak & minyak hewan/nabati 9,619.7 -6.1 12.9 89 Kapal laut 726.8 542.8 294.9

85 Mesin/peralatan listrik 5,200.5 -4.1 7.0 80 Timah 1,303.7 230.5 21.5

40 Karet dan Barang dari Karet 4,906.0 -14.9 6.6 75 Nikel 514.3 180.9 54.3

84 Mesin-mesin/Pesawat Mekanik 2,954.2 -4.5 4.0 64 Alas kaki 1,955.4 176.8 9.9

26 Bijih, Kerak, dan Abu logam 2,726.7 2.8 3.6 31 Pupuk 413.1 176.1 74.3

87 Kendaraan dan Bagiannya 2,214.3 -5.4 3.0 47 Bubur kayu/Pulp 867.4 113.4 15.0

62 Pakaian jadi bukan rajutan 2,011.1 3.9 2.7 16 Daging dan Ikan Olahan 491.7 88.7 22.0

64 Alas kaki 1,955.4 9.9 2.6 23 Ampas/Sisa Industri Makanan 338.1 79.0 30.5

48 Kertas/Karton 1,869.9 -7.7 2.5 62 Pakaian jadi bukan rajutan 2,011.1 74.9 3.9

44 Kayu, Barang dari Kayu 1,780.9 1.5 2.4 26 Bijih, Kerak, dan Abu logam 2,726.7 73.3 2.8


7


Export of Several Products Was Significantly Increased

Largest Export of Semester I 2013 Largest Export Increase (USD) Semester I 2013

• During Semester 1 2013, some export pf manufacturing products was experienced growth on export. Those products are: Marine Vessel, Footwear, and clothing un knitted , each294,9%,9,9%, and 3,9% (yoy)

EXPORT AND IMPORT PERFORMANCE OF THE NATIONAL

TEXTILE AND FOOTWEAR INDUSTRY


INDONESIA’S ECONOMIC STATUS

Source: Mckenzie Report: Unleashing Indonesia’s Potential, 2012


Who Are Indonesia’s Trading Partners

10

• Indonesia’s Trading Partners are mostly traditional trading partners. At the moment, Indonesia’s trade performance is supported by the generosity of GSP facilities received from those trading partners, namely: USA and EU


No Negara

US$

2008 2009 2010 2011 2012 Jan-Jun

2012 2013

1 USA 3,796,567,426 3,479,913,719 4,141,370,452 4,573,144,225 4,098,877,214 2,115,337,675 2,160,598,212

2 MALAYSIA 226,350,750 205,734,370 232,414,252 267,852,645 277,767,395 160,718,889 163,551,041

3 BELGIUM 233,575,594 198,152,786 224,555,799 261,967,031 241,156,561 128,031,394 111,983,458

4 THAILAND 142,994,497 119,233,798 151,460,718 180,426,997 195,246,991 95,499,783 108,797,493

5 ITALY 211,441,273 163,852,826 224,826,202 257,939,910 189,616,849 93,650,926 110,030,843

6 SAUDI ARABIA 170,911,987 173,092,291 161,360,925 199,395,159 185,966,356 110,080,521 72,417,848

7 CANADA 143,390,738 128,093,509 163,803,129 202,944,823 179,727,677 97,732,356 93,854,953

8 NETHERLAND 179,904,601 156,542,113 192,085,642 230,523,952 176,818,333 89,619,998 92,421,538

9 AUSTRALIA 89,393,156 83,594,870 104,887,670 138,529,023 156,850,495 75,337,925 80,499,510

10 VIETNAM 100,741,915 88,633,152 121,907,093 148,987,113 146,239,944 71,532,550 75,254,855

11 EGYPT 91,005,764 85,630,321 95,440,261 130,188,201 142,637,813 76,157,447 96,407,436

12 JAPAN 546,952,445 474,068,428 625,021,460 994,699,673 1,069,391,178 513,109,895 582,222,320

13 SPAIN 131,813,592 121,628,045 153,038,195 210,949,776 140,624,892 66,574,090 66,389,463

17 GERMANY 600,005,234 530,442,329 592,052,871 728,128,755 622,910,373 313,432,134 290,438,449

18 TURKEY 326,199,690 309,051,558 469,932,769 608,039,852 564,374,767 305,114,859 296,858,100

19 SOTH KOREA 285,888,238 325,116,877 441,587,523 513,595,530 554,634,112 267,470,529 285,697,335

20 CHINA 175,116,118 180,617,348 300,891,793 388,376,669 448,159,775 192,822,319 262,661,459

21 UNITED ARAB

EMIRATES 364,384,936 307,789,152 329,127,765 390,520,877 410,126,455 209,512,883 203,939,099

22 IUK 384,326,831 360,383,933 375,817,302 405,714,540 373,173,645 201,098,442 164,593,350

23 BRAZIL 259,612,444 269,731,132 314,945,292 352,964,458 352,513,514 170,869,298 178,113,39

Share of Textile and Textile Products (TTP) Export to National Export and Import Performance Relatively High

• For the past five years, the Indonesian export indicated a positive trend with the average increase of 7,9% annually.

• Even So, the contribution of TTP to the national export indicated a slight gradual decline over years. In 2007, the share of TTP to export was 10,7% and in 2011 declined to 8,2%.

• Indonesian TTP export to the world is dominated by clothing.


Indonesia’s TTP Export Structure to The World (%)

9,810.20 10,144.88 9,263.98

11,224.04 13,256.79

11,405.90

10.7%

9.4% 9.5% 8.7%

8.2% 8.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

2007 2008 2009 2010 2011 Jan - Nop 2012

p

e

r

a

n

a

n

U

S

$

M

i

l

l

i

o

n

TPT Peranan TPT - Non migas

Fabric, 2.5%

Cloting 60.0%

Knit and Fiber 37.5%

2011

Fabric, 3.0%

Clothing, 60.7%

Knit and Fiber, 36.3%

2012

11


US, Japan and Germany Remain The Main Market of Indonesia’s TTP and Footwear Export


USA, 38.32%

GERMANY, 5.38%

JAPAN, 5.13%

UK, 3.78%

TURKEY, 3.56%

UNITED ARAB EMIRATES, 3.13%

BRAZIL, 2.90% SOUTH KOREA, 2.61%

MALAYSIA, 2.32%

ITALY, 2.30%

2007

USA, 34.50%

JAPAN, 7.50%

GERMANY, 5.49%

TURKEY, 4.59%

SOUTH KOREA, 3.87%

UK, 3.06%

UNITED ARAB EMIRATES,

2.95%

PEOPLES REPUBLIC OF CHINA, 2.93%

BRAZIL, 2.66%

MALAYSIA, 2.02%

2011

USA, 32.86%

JAPAN, 8.61%

GERMANY, 4.99%

TURKEY, 4.48%

SOUTH KOREA, 4.45%

PEOPLES REPUBLIC OF CHINA, 3.48%

UNITED ARAB EMIRATES, 3.30%

UK, 3.04% BRAZIL, 2.84%

2012

• The US, Japan and Germany remain as the Indonesia’s Main Export Destination. Even so, their share changes over time.

12

According to Mckinsey Projection, Indonesian GDP would reach around USD 4 Trillion in 2030. With the Assumption that The Share of TTP and Footwear Remain The Same, It is projected that

Indonesian export would reach up to USD 80 billion (8.1% of National Non Oil and Gas Export

(USD 800 Billion )


THE ROLE OF TTP ACCORDING TO ECONOMIC CORRIDOR

Provinsi

Nilai Ekspor (Juta

US$ 2012 Jan

Nov)

Peranan

terhadap TPT

Nasional (%)

KORIDOR EKONOMI JAWA 11.167,9 97,91%

D K I JAKARTA 9.002,5 78,93%

JAWA TENGAH 1.594,3 13,98%

JAWA TIMUR 533,3 4,68%

JAWA BARAT 35,0 0,31%

BANTEN 1,8 0,02%

D.I. YOGYAKARTA 1,0 0,01%

Provinsi

Nilai Ekspor (Juta

US$ 2012 Jan

Nov)

Peranan

terhadap TPT

Nasional (%)

KORIDOR EKONOMI SUMATERA 161,39 1,41%

KEPULAUAN RIAU 142,37 1,25%

SUMATERA UTARA 14,94 0,13%

LAMPUNG 4,02 0,04%

NANGROE ACEH DARUSALAM 0,04 -

R I A U 0,02 -

SUMATERA SELATAN 0 -

SUMATERA BARAT 0 -

J A M B I - -

BANGKA BELITUNG - -

Provinsi

Nilai Ekspor (Juta

US$ 2012 Jan

Nov)

Peranan

terhadap TPT

Nasional (%)

KORIDOR EKONOMI BALI - NUSA TENGGARA 76,12 0,67%

B A L I 75,81 0,66%

NUSA TENGGARA TIMUR 0,31 -

NUSA TENGGARA BARAT 0 -

• Indonesian TTP Export was dominated by companies in Java, especially In Greater Jakarta, Central and East Java

Sumber: BPS (diolah) 14

CHALENGES AND OPPORTUNITIES


P R O B L E M S O F T H E T T P A N D F O O T W E A R I N D U S T R Y

Condition of Machineries affect the productivity of the industry

The demand of large number of power with competitive price. The price of energy to industry is one of the key of competitiveness

Limited Number of Skillful Operator

Limited Number of Investment

Limited Number of Raw Materials for Production

The high cost of transportation, including harbor turnover

The Regulation of Regional Minimum Wage


S T R A T E G I C P O S I T I O N O F T T P S E C T O R T O N A T I O N A L

E C O N O M Y

CONTRIBUTION OF TTP INDUSTRY TO THE MANUFACTURING WORKFORCE 2012

Agriculture, Forestry, Hunting

and Fishery 35.9%

Mining and Quarrying

1.4%

Manufacturing Industry

13.9% Electricity, Gas, and Water

0.2%

Construction 6.1%

Wholesale Trade, Retail Trade,

Restaurants and Hotels 20.9%

Transportation, Storage, and

Communications 4.6%

Financing, Insurance, Real

Estate and Business Services

2.4%

Community, Social, and

Personal Services 15.2%

2012 (August: 110,8 million People.)

INDUSTRIAL DISTRIBUTION OF TTP

2012

Source: Indonesian Statistics Source: Indonesian Statistics.

Textiles Industry.

1.4% to national worker

9.7% to manufacture

Jawa Barat 43.6%

DKI Jakarta 16.4%

Banten 14.8%

Jawa Tengah 13.5%

Jawa Timur 5.5%

Bali 3.1%

Sumatra Utara 1.6%

DI Yogyakarta 1.1%

Sulawesi Selatan

0.1%

Sumatra Barat 0.1%

Sulawesi Tenggara

0.1%


INDONESIA’S ACCESS THROUGH BILATERAL COOPERATION/CEPA

18

3

expanding to

Eastern Europe

expanding to

Latin America

Source : CIA Factbook(2007)

NAFTA

Population: 445 million

GDP: US$15.857 trillion

EU

Population: 491 million

GDP: US$ 14.38 trillion

CHINA

Population: 1.330 billion

GDP PPP: US$ 6.991 trillion

JAPAN

Population: 127 million GDP PPP: US$ 4.29 trillion

ASEAN

Population: 575.5 million

GDP: US$ 3.431 billion

FTA Canada – Chile 1997

FTA : Chile – Mexico 1999

FTA : USA – Chile 2004

FTA : USA – Singapore 2004

FTA : USA – Australia 2005

FTA : Mexico – Japan 2005

FTA : Chile – Brunei – NZ –

Singapore 2006

MERCOSURArgentina, Brazil,

Paraguay, Uruguay

FTAA(by 2005)

under negotiation

NAFTAU.S.A.,

Canada,

Mexico

SAPTABangladesh, Bhutan,

India, Maldives,

Nepal, Pakistan, Sri

Lanka

China - ASEAN FTA

ASEAN-Japan Comprehensive

Economic Partnership

(AJCEP)

Japan-Korea FTA(under negotiation)

Japan-Mexico EPA(signed agreement)

Japan’s Bilaterals:

• Japan-Singapore EPA

• Japan-Philippines EPA

• Japan-Thailand EPA

• Japan-Malaysia EPA

• Japan-Indonesia EPAAFTA

Indonesia, Malaysia, Philippines,

Singapore, Thailand, Brunei,

Vietnam, Laos, Myanmar, Cambodia

India - ASEAN FTA

EU-MEXICOFTA

EU25 countries

ACP-EUCountries in Africa

and the Caribbean

(approx. 70

countries)

Japan-

MexicoEPA(signed

agreement)

Japan-Korea-China FTA (under negotiation)

Australia-New Zealand-ASEAN FTA

Korea - ASEAN FTA3

EXPORT OPPORTUNITIES


INCREASING COMPETITIVENESS

1. TTP is a non regulated goods for export based on Minister of Trade Regulation

No. 13/M-DAG/PER/3/2012 about General principles of Export, which enacted on

March, 19 2012 as the revisoon of Miniter of Trade and Industry

No.558/MPP/Kep/12/1998 as also revised on Minister of Trade Regulation No.

01/M-DAG/PER/1/2007.

2. The Ministry of Trade also tried to control the flow of import through Minister of

Trade Regulation No. 23/PER/M-DAG/6/2009 as revised to No. 02/M-

DAG/PER/1/2010 about the Principles of Textile and Textile Products Import

3. There is also another regulation about the impose of safeguard to the

importation of fabric and yarn.

21


• New Market: South Africa and East and Central Asia, South Asia and South East Asia (Breakthrough of Trade Mission and Negotiation).

• Existing Market: Maintain (Promotion and Diplomacy).

• Utilize The Domestic Market Potentials: For Import Substitution – Encouragement of Domestic Industry to be More Efficient (Innovation- Positioning Indonesian Industry on Product Life Cycle Position).

• Restructuring The Business Process: Internal External

NEW MARKET OPPORTUNITIES FOR INDONESIAN

EXPORT

22


• The Textile and Textile Products and Footwear Industries Remain as Indonesia’s Strategic Industry; According to the projection of Mckinsey, that in 2030, the Indonesian GDP would reach around USD 4 Trillion. With the Assumption that The Share of TTP and Footwear Remain The Same, It is projected that Indonesian export would reach up to USD 80 billion (8.1% of National Non Oil and Gas Export (USD 800 Billion ) .

• Indonesia has a great potential to develop Those Two industries, based on two facts: 1. Indonesia has competitive land price for business development 2. Indonesia has large number of human resources to work in the Industry. Considering the fact that this sectors provide large employment opportunities (15% of Manufacturing), Government of Indonesia (GoI) placed its high concern over the sustainability of this industry;

• According to Trade Data, Indonesia’s main export destination for TTP and Footwear products are located in its traditional market like USA and EU. This fact was supported with some of temporary benefits of GSP enjoyed by Indonesia. Therefore Indonesia try to make a certain market access through international trade agreement. This effort is meant to give a permanent competitiveness to Indonesian products;

• Indonesia’s domestic Industry remain strong, coupled with the strong economic performance of South East Asia, Indonesian industry is looking forward to sustain its

CONCLUSION

23


• In order to increase the presence of Indonesian products, The GoI had facilitated the industry to be actively involved in trade promotion activities, like: 1. Domestic : Gelar Sepatu, Kulit & Fashion Indonesia 2013, INATEX 2013, The 28th Trade Expo Indonesia 2013, and Pameran 6th Uniform and Workwear 2013 at Plaza Industri 2. International: Bangkok International Fashion Fair & Bangkok International Leather Fair 2013 (BIFF&BIL 2013) and Intertextile Shanghai Apparel Fabrics di Shanghai

• The GoI has tried to adressed some key issues to the development of this industry. For examples, The GoI had tried to stimulate industries to restructure its machineries since 2007. This effort has been positively welcomed by business.

• The GoI has also tried to increased the number of qualified operators for industry through the establishment of training centre. It is expected that the presence of training centre will provide sufficient number of qualified workers for this industry.

Those centers were established in Kuningan, Cirebon, Indramayu Subang, Sukabumi, Cianjur, Pandeglang, West Jakarta, Bandung Barat, Bandung, Sukabumi, Subang, Semarang, Jombang, Malang and Madiun.

CONCLUSION

24

THANK YOU

Website : www.kemendag.go.id

http://www.kemendag.go.id/

traditional market: 1. usa 2. singapore 3. japan 4. china 5. malaysia

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