Indonesia's Role in U.S. Apparel Market Expands

Indonesia exported US$3.67 billion worth of apparel to the U.S. market in 2006, which was a 5.29 percent market share of all apparel imports, making it the third largest apparel supplier to the U.S., only falling behind China and Mexico.  Exports have further increased in first quarter 2007, placing Indonesia in a position to replace Mexico in 2007 and move into position as second largest supplier.  

Indonesia has been very successful in competing with China in the U.S. market, especially in man-made fiber apparel.  During first quarter 2007, Indonesia exported US$363.25 million worth of man-made apparel to the U.S. market, which represented 26.09 percent year-on-year growth and made it the second largest supplier to the U.S. market, replacing Mexico for the first time in 2007.  Exporters have increased shipments at nearly twice the rate of growth in total U.S. imports.   The country has not only taken market share from Mexico but also Taiwan, Canada and South Korea. 

U.S. cotton apparel imports from Indonesia during first quarter 2007 increased 18.04 percent, reaching US$616.187 million, making it the fifth largest supplier only falling behind China, Mexico, India and Bangladesh.  The success in the U.S. market is drawing new foreign investment in the sector.  2006 FDI in textiles and apparel is estimated at over 400 million U.S. dollars, which is more than five times the level of 2005.

Indonesia Releases Textile Aid Funds

A block of 255 billion rupiah or approximately US$28.02 billion of government aid is now available to Indonesian textile mills for the purchase of new upgraded machinery that was manufactured after 2005. 

The fund allocation is 20 percent to yarn spinners, 50 percent to weavers and 30 percent to apparel manufacturers and will be paid directly to firms after they have purchased the new equipment.  Each approved mill is expected to have a maximum of 11 percent of their total upgrade costs covered by government aid.  175 billion rupees of this aid will go to pay interest costs on private loans secured for the upgrade, and 80 billion will be designated as soft loans for the equipment purchase.

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