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Indonesia to Provide Incentives to Boost Textile, Footwear Sectors

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The Indonesian Ministry of Industry on Tuesday unveiled a new plan aimed at boosting textile and footwear exports and growing the country’s revenue.

The plan will provide incentives to domestic textile and footwear manufacturers to step up production by easing government requirements concerning raw material procurement and financing, and stockpiling cotton and leather to ensure steady supplies.

In addition, the director general of chemical, textile and miscellaneous industries, Harjanto, said the government wants to expand its circle of trading partners by forming more free-trade agreements (FTAs) with countries to which it can export its garments and footwear.

Weak global oil and commodity prices have hurt the Southeast Asian economy and slowed domestic consumption (a recent Nielsen survey revealed that more than half the population thinks the country is in a recession), while a falling rupiah (it plummeted to a 17-year low again the U.S. dollar in March) hasn’t helped exports.

In recent months, around 200 footwear manufacturers laid off about 40,000 workers, according to the Indonesian Footwear Association, while the Indonesian Textile Association (API) said at least 6,300 workers were let go from 120 textile factories and production hours have been cut back to just three days as a result of weak sales.

“We are really shocked by this situation. Our warehouses are full but we cannot sell,” API chairman Ade Sudrajat told the Jakarta Post.

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