JAKARTA: Indonesian Industry Ministry plans to allocate Rp 100 billion (US$7.9 million) from its 2015 budget to finance an annual program to revitalize old machinery in the textiles, leather-working and footwear industries in an effort to develop these fields and stimulate more investments.
According to Industry Minister Saleh Husin, the revitalization program remained one of the ministry’s top incentive strategies for achieving the industry-wide growth target of 300 percent by 2019.
“This program has lasted seven years and it’s proven very effective in increasing productivity. That’s why we decided to continue it,” Saleh told reporters on the sidelines of the program’s launch event in Jakarta here the other day.
Saleh said he would make sure that the proposed sum would be utilized to the fullest extent, despite being lower than last year’s Rp 106.5 billion in allocated program funds.
According to ministry data, the program has rejuvenated 1.88 million machines since its commencement in 2007, with another 3.66 million machines more than 20 years old awaiting upgrades.
There are currently six categories of machine eligible for rejuvenation, including textile looms, knitting machines and those used in footwear manufacturing and the mass-production of garments.
The ministry’s director general for industrial manufacturing, Harjanto, said that the state had disbursed Rp 1.18 trillion to fund the project between 2007 and 2014, attracting Rp 14.84 trillion in realized investments for machinery revitalization.
This year, the government was aiming to attract at least Rp 1 trillion from the textiles, leather-works and footwear community, Harjanto said.
“We hope that these industries will be able to attract more investors to achieve the Rp 270 trillion non-oil and gas investments target, especially in the upstream sector,” the ministry official said here the other day.
Ramon Bagun, the ministry’s director for textiles and miscellaneous industries, said that the ministry would provide a 10 percent cut on the price of the machines, with a maximum disbursement of Rp 3 billion per case.
“After collecting company proposals, we’ll have a technical meeting to determine which requests are accepted, before the funds are disbursed through the State Treasury Agency [KPKN],” Ramon told The Jakarta Post on Tuesday.
He said that companies were able to register for the program from next Monday until June 30. Last year, only 122 of the 188 proposals were accepted for the program because of a lack of funds, Ramon explained.
Ade Sudrajat, the chairman of the Indonesian Textile Association (API), said he appreciated the government’s ongoing commitment to the program, but hoped that it would also look toward leveraging the industries’ exports. “We won’t deny that [the industries’ trade balance] is still in surplus, but if there are no further efforts for development, like forming new trade agreements, growth will remain insignificant,” Ade told reporters here the other day.
