The Indonesian garment industry needs to make radical changes to cope with the economic slowdown, by improving competitiveness, garment experts say.
Decreasing demand has forced the garment industry globally to cut expenses through layoffs, relocation of production activities to lower cost countries or even by selling majority shareholdings to bigger companies.
"The garment companies must develop their competitiveness by investing in technology and doing research to improve themselves," Ferry Dzukilfi, the regional manager for the USAID Senada competitiveness program, said in a seminar on the sector in Bogor, West Java, Tuesday.
He said the growth of the Indonesian garment industry in 2008 had been only 0.18 percent.
The economic slowdown was also marked by the decline of US consumer expenditure on clothing by 0.2 percent in the first quarter of 2008 from the same period in 2007.
Another speaker, Kurniasaputra, director of Garment Partnership Indonesia, an association for garment industry stakeholders, criticized the industry as lacking innovation. "Most of their products are for foreign labels and production is only *geared* to meet buyers' demands."
Satia Pratiwi, an industry advisor, explained that most garment companies depended mainly on cheap labor to enhance competitiveness. Whereas the labor cost in Indonesia is US$0.50 an hour, higher than that of Vietnam ($0.38), Pakistan ($0.37), or Cambodia ($0.33).
The lack of competitiveness in Indonesia was shown by the data from the Global Competitiveness Report 2008-2009 which recorded Indonesian labor market efficiency with a ranking of 43 out of 143 countries.
Indonesia's performance lagged behind neighboring countries such as Thailand (rank 13), Malaysia (rank 17), and even Cambodia (rank 33).
