Generous Indonesian Government Support

Generous Indonesian Government Support

SHARE

The apparel and footwear industry have been made a priority sector by the Indonesian government as they employ nearly 3.5 million people and accounted for almost 15% of the total workforce in the manufacturing sector. To improve the investment climate in these two sectors, the Indonesian government has established a special desk on textile and footwear investments to facilitate and mediate problems faced by investors in both sectors.

The government through the Ministry of Industry also provides incentives to companies. This incentive aims to encourage the restructuring of machinery and equipment to improve the competitiveness of the textile and footwear industries by investing in more modern production methods.

To further improve the Indonesian sportswear industry’s competitiveness, the government also provides an income tax facility in addition to other incentives such as expediting the licensing process of investments in the industrial zones), slashing import fees for capital goods, an interest rate cut for exporters, and introducing a fixed formula for annual wage increases. Despite strong growth,

Indonesia’s sportswear industry still faces several domestic challenges which hamper its competitiveness. These challenges include complicated licensing procedures in the regions outside of West Java, a significant increase in labour wages, the lack of domestic raw materials supply, and expensive energy costs. The government’s support is of cardinal importance to overcome these challenges.