Study on Performance of Textile and Textile Product Industry and Their Influencing Factors

Abstract

Textile and textile product industry which is one of priority industries in national industry policy, has an important role in Indonesia economics. Nowadays textile and textile product industry faces many problems such as in financial, engine condition, energy, labour, and infrastructure sector. Using a system of simultaneous equations models, the study found that the performance of the national textile industry can be improved through, among other things: increasing the value of exports and the value of investment in the textile sector, increasing the value of consumption of textile products, maintaining the stability of the rupiah against the U.S. dollar, increasing the value of restructured machinery/textile equipment through the textile industry technology improvement program, increasing per capita incomes, lowering prices of textile products, the domestic energy prices and domestic prices of raw materials, renegotiating the tariff rates of import duty for textile products to not lowered. Implementation of decentralization policies in Indonesia, followed by improving the investment climate in the region is also the driving factor to accelerate the performance of the national textile industry. Based on factors effect to textile/textile product industry performance mentioned above, the government policy should support in complete comprehensive and integrate with national action plan, which also implemented in across textile/textile product industry areas. Strategy should cover every aspect such as: energy, human resources, market share, technology and product development, as well as infrastructure. The other important thing to formulate textile industry development strategy is a better business climate in the form of monetary/fiscal policy support, cooperation among other linkage sectors such as: private bank/financial services, transportation services, port and infrastructures, energy provider services, and trade services.