Indonesia’s Sritex Flexes Its Textile Muscles As Level Playing Field Emerges In Asia

Economy

Indonesia’s Sritex Flexes Its Textile Muscles As Level Playing Field Emerges In Asia

Given the rising costs of labor in neighboring Asian nations, Indonesia’s textile giant Sri Rejeki Isman is having a field day with its textile exports getting a major boost in the recent months.

The breakup of the company’s exports was given as 53 percent to Asian nations, 19 percent to Europe, and 18 percent to the United States. At present there are two factors that are augmenting the export earnings of Sritex, namely issue of minimum wages faced by foreign counterparts and the Comprehensive Economic Partnership Agreement (CEPA) that will be signed with the European Free Trade Association (EFTA).

The government of Indonesia is on the verge of closure of this trade deal which will boost the open access available to Indonesian companies to the European markets. The quantum of exports that would be increased rests at a whopping 20 percent. At present however, the textile exports of Indonesia to the European Union face a stiff 11 to 30 percent import tariff.

There is also another factor that favors Indonesia in boosting exports. US President Donald Trump has withdrawn the USA from the Trans Pacific Partnership (TPP). Till then neighboring Vietnam had an edge over other countries as they were part of TPP. Indonesia which was not a part of the TPP now has a level-playing field and can expand its range of operations.

In the south east Asian region, Sritex has emerged as the biggest vertically integrated manufacturer of garments and textiles. At present, they are well-able to cater to four segments, namely dyeing, spinning, weaving and garment. Currently, they have finished expansion projects in each of these segments.