Indonesia to allocate 177 billion rupees to restore national footwear development

The Indonesian Ministry of Industry allocated 177 billion rupees (20.36 million U.S. dollars) for a plan this year to restore the nation’s textile, footwear and leather industries.

Su Shanduo, director of the Industrial Manufacturing Bureau of the Ministry of Industry, said that this financial aid will be distributed to 150 textile companies and 20 shoe production units and tanning units so that they can update their old equipment.

Su Shanduo said at the announcement of the plan held by the Ministry of Industry Office: “We hope that this will improve the technology. These companies can improve their productivity and efficiency and therefore be more competitive.”

He said that with better production and increased production, local companies may gain a bigger share in the global market.

The data cited by Su Shanda indicates that in recent years, the output of domestic textile products has risen sharply. Per capita annual textile consumption increased from 3.9 kilograms in 1999 to 4.5 kilograms in 2005 and 5.3 kilograms in 2008. This year's consumption is estimated to reach 6.5 kg. For example, Indonesia’s share in the global textile export market is expected to rise from 1.8% this year to 2.5% in 2014. The recovery plan for the textile industry was established in 2007. Similar plans for the footwear and leather industries were established in 2009.

According to the revival plan, qualified companies will receive 10% of the new model's total purchase.

According to the Ministry of Industry, thousands of textile companies nationwide have about 4 million spinning machines, 200,000 looms and 34,000 knitting machines for more than 20 years of use.

Last year, according to the same plan, the government allocated approximately 144.37 billion rupees to 151 textile companies, which is lower than the government’s target of 154.15 billion dollars; and allocated 18,300 million rupees to 24 footwear and leather companies, and was lower than the budget of 24.45 billion rupees. .

Part of the reason for the lower-than-expected loan distribution rate is that many qualified companies are not prepared to join the plan. The Minister of Textiles said when the plan was released.

Sutrachart, president of the Indonesian Textile Association, said that many textile companies were not qualified to use this incentive last year due to delays in procurement. However, in addition to such obstacles, the mechanical innovation program benefits the local textile industry.

The 10% stimulus money means that textile companies need to pay more to purchase machinery, and bank loans can only meet 30% of the total purchase cost.

At present, Indonesia’s work on textile machines from China and Japan’s nuclear European countries, including Germany, Belgium and Spain, is just around the corner.