How many Indonesian workers are in China
Indonesia: a clothing giant to be reckoned with
With an export volume of almost 12.5 billion US dollars in 2012 and around two million employees, the Indonesian clothing and textile industry is firmly in the top ten (according to some sources even the top five) of the most important clothing exporting countriesestablished in the world.
As seen in the portraits of Vietnam and India, there are also voices for Indonesia who, in view of the current accidents in clothing factories in Bangladesh, foresee a relocation to other clothing-producing countries. Industry experts such as Ade Sudrajat, chairman of the Indonesian Textile Association, doubt this. "The recent incidents in Bangladesh are not a major reason for international orders to be moved to Indonesia," he says, adding, "Indonesia is maintaining its position in the global apparel market because we are promoting democracy rather than economy."
USA, EU and Japan are the main importers of clothing
The US, European Union and Japan rely on Indonesia to meet their ready-to-wear clothing needs. In 2011, 36 percent of all textiles and clothing manufactured in Indonesia went to the USA, 16 percent to the EU and 5 percent to Japan.
If you want to look around for clothing manufacturers in Indonesia, you can make use of the fact that the Indonesian textile and clothing industry is highly concentrated and that most of the factories are located on the island of Java, especially in the west. The capital Jakarta and the island of Batam in the northwest also have a strong concentration of clothing factories, the latter taking advantage of its proximity to Singapore - Batam is only 20 kilometers from the south coast of Singapore and is part of a special economic zone with the city-state, the tariffs and VAT for stores goods traded between the two ports. Lower labor costs and special government subsidies also make the island attractive for foreign companies that operate factories here.
Bangladesh can learn from Indonesia
Even if a major shift in orders from Bangladesh to Indonesia is not expected, the Southeast Asian and oceanic nation could be a role model for its northern competitor in terms of improving working conditions and wages and remaining competitive. Finally, after a series of sweatshop scandals in the 1990s, Indonesia successfully improved its apparel industry through a combination of government funding and agreements between trade unions and international clients, and introduced better health and safety measures.
"We are much better than Bangladesh in many ways; we have one of the best minimum wages in Asia and we are relatively free to form unions," said Surya Tjandra, a labor law expert at Atma Jaya University in Jakarta Christian Science Monitor.
Like many Asian countries, the nation, with a population of 260 million, built its clothing industry in the 1970s and benefited from cheap labor that was readily available and in abundance. The resignation of autocratic President Mohamed Suharto in 1998 has also helped the country as he initiated labor market reforms along with democracy. In particular, former President Megawati Sukarnoputri (2001-2004) promoted worker-friendly laws, including one from 2003 promoting high severance pay. In 2012, the minimum wage rose by up to 40 percent and is currently between 80 and 160 US dollars a month for clothing workers (for comparison: wages in the Southeast Asian neighbor and competitor Cambodia are around 75 US dollars a month).
agreement help between clients, suppliers and unions
Agreements like the Freedom of Association Protocol (FOAP) have made a huge difference. It was signed by trade unions, factories and six international sportswear brands in June 2011 to “support the rights of women and men who manufacture for international brands in Indonesia to join trade unions and work together for better working conditions and change. ” Although only six international clients signed the agreement - Adidas, Asics, New Balance, Nike, Pentland and Puma - it was an important milestone as these six make up the majority of sporting goods manufacturers worldwide and it was also the first agreement ever to make the commitment local labor law groups, suppliers and international clients alike.
Given that the Indonesian clothing market is still fragmented, every single large international client has the opportunity to make a difference. In 2012 there was no single domestic or international client with a share of more than one percent in the Indonesian clothing market. The Spanish fashion giant Inditex came closest to the top position, followed by shoe manufacturer Bata.
According to Scott Nova, executive director of the Worker Rights Consortium, agreements like FOAP are important because they “address the obligations of factory owners, brands and retailers alike,” but there is still a gap between theory and execution. "There have been major problems with workers who have been deprived of their severance pay and even if the minimum wage is much higher [than elsewhere] thanks to massive protests, it is still starvation wages," says Nova.
Like Vietnam (and Cambodia, Haiti, Jordan, Lesotho and Nicaragua worldwide), Indonesia has been part of the International Labor Organization's Better Work program since 2011, which aims to improve working conditions in garment factories while promoting productivity and competitiveness. According to the Better Work website, the implementation of the program in the country is looking good: “Even if it is still in the early years, the program has already been successful in attracting participation from businesses and international clients, with Korean multinational suppliers making the percentage make up a large proportion of investors who have taken the lead and innovate with a social media pilot project aimed at workers. "
Challenges and opportunities for Indonesia
In terms of challenges, Indonesia will face a problem that is widespread among developing countries, namely the need to invest in machinery, equipment and technology. Around 70 percent of all machines used in the textile and clothing industry are considered obsolete, i.e. they are more than 10 years old. In response to this problem, the Indonesian government introduced a restructuring program for textile machines in 2007, which promises incentives such as discounts and lower interest rates on machines. In addition, the import of textile machines is duty-free.
Competition from China and other Asian countries is another challenge for Indonesia, especially with regard to Chinese exports of fibers, textiles and clothing after China was included in the Association of Southeast Asian Nations (CAFTA) Free Trade Agreement in January 2010. After an initial surge Chinese exports by 70 percent, however, as a manufacturer of high-quality goods, Indonesia will benefit from the agreement in the medium term.
According to the Global Business Guide Indonesia, the growth of domestic clothing and textile production also remains a major challenge: “The branding and marketing of textiles made in Indonesia has been poorly carried out in the past and domestic brands have not gained a good foothold with Indonesian consumers. Foreign apparel brands are thriving at the top of the market, as are imports of cheap apparel from China. With a reorientation of the sector towards higher quality goods and a greater focus on innovation and creativity, Indonesia has a strong base for further development of its apparel, textile and textile fiber industries. ”
This article concludes our series of country profiles of the top exporters in the apparel sector. Please send comments, questions and suggestions to [email protected]
Photos: Made in Indonesia (Noricum), women workers in a clothing factory (Better Work Indonesia); a tailor in Java (Nick Sarebi)
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