Business Finance

Garment makers cash in on big foreign orders

Indonesia's garment industry has been reaping profits this year filling out orders worth US$230 million placed by 17 branded garment producers from Germany, the United States, South Korea and Taiwan.

The orders, which amount to a three-year high for the industry, were made out to 30 local garment manufacturers, said Henrietta Lake, the senior consultant of U.S. agency for international development project Senada, on Thursday.
Lake said the global producers had been attracted by the competitive prices and high quality products offered by the industry's textile and garment manufacturers.
"The quality of Indonesian garment products are better than other countries, including Bangladesh. Indonesian products are likely to be ready to take over China's market," she said.
She said Indonesia's garment prices were even more competitive than those of Vietnam, the Philippines, China and Cambodia.
The orders were place by companies including Abercrombie & Fitch, Dewhirst, HanesBrands, J.Crew, JCPenney, GAP, Jones Apparel, Li & Fung, Linmark, Liz Claiborne, Nike, PIERS, Ralph Lauren, Target, Vanity Fair and Walmart.
Executive director of national textile research institute Indotextiles Redma Gita Wirawasta said GAP had placed an order for 12 million to 14 million items worth $100 million and Walmart had ordered 11 million to 13 million items valued at $80 million.
SOT and Marks & Spencer submitted orders for 8 million items, worth $60 million.
"Orders from other global garment manufacturers like Target, Nike, Adidas, Levi's, Arrow, Van Houesen, only reach less than $50 million... However, their orders grow by an average of 10 percent annually," said Lake.
The country is the global garment market's 10th biggest provider and the U.S. market's third biggest, Lake said, citing a recent study.
The country's garment exports reached $2.1 billion in the first semester of this year, up 6 percent from last year.
Lake said demand for local garment products had increased by between 12 and 14 percent compared to last year.
The country's textile and garment industries are enjoying a revival after being devastated by the 1997 Asian financial crisis, which left companies unable to expand capacity and invest in new machines.
Last year, the Industry Ministry disbursed Rp 255 billion (US$27.87 million) in interest rate subsidies and soft loans to 92 textile and garment manufacturers for purchasing new machinery.