According to the Statistica Indonesia (BPS), in the second quarter of this year, domestic and global demand slowed by 14.23% (YoY) compared to the year-on-year growth of 20.71% in the same period of 2019, due to the competitiveness of the Indonesia textiles and apparel sector.
The textile industry contracted in the second quarter of this year more than the manufacturing sector, which decreased by 6.19% YoY. The Indonesian textiles industry is considered to be less competitive in the industry of the country than that of other nations mainly due to its high energy and logistics costs, low productivity, multifarious value-added taxation from upstream to downward and low technology machines. Redma Gita Wirawasta, Researcher, Indonesian Textilinstitutes (Indotex)
The continued use of outdated machines corresponded with investment data, which indicates Faisal Basri, Economist of the Institute for Development of Economics and Finance (INDEf). This reveals that most of the investment funds were channeled to new buildings and not to machinery and equipment upgrades.
Machinery and equipment investment decreased by 12,87% YE in the second quarter because, for the first time in 1998, the Indonesian economy contracted as a pandemic. During the second quarter of the COVID-19 crisis, the economy contracted by 5.32 per cent with household consumption and investment declining. Moreover, the health crisis has led to a 5,31-percent annual decrease in household expenditure on clothing, shoes and clothing.