March 2, 2020 / 12:27 PM / a month ago

Indonesian textile makers get windfall from coronavirus outbreak

JAKARTA, March 2 (Reuters) - While parts of Asia’s clothing industry suffer closures and layoffs, Indonesian textile companies are seeing a windfall by filling orders caused by a delay in shipments from China due to the coronavirus outbreak, company executives said.

Garment factories in some parts of Asia have been forced to send home workers and close factories as quarantines and travel restrictions due to coronavirus disrupt supply chains linked to China.

However new domestic and export orders to Indonesia’s textile industry have risen by around 10% this year as factories seek to substitute material from China, said Anne Patricia Sutanto of the association of textile and textile products makers.

Tangerang-based PT Pan Brothers has seen demand rising 20% more than expected for the second and third quarter, said Sutanto, who is also the company’s vice chief executive.

The textile-to-garment company had initially forecast a 15% rise in sales this year.

“Our textile industry is benefitting from the coronavirus outbreak. This has created opportunities and also created our own local supply chain,” said Sherlina Kawilarang, president commissioner of yarn maker PT Excellence Qualities Yarn.

PT Sri Rejeki Isman, among the biggest integrated textile manufacturers in Southeast Asia, had also recorded an additional 15% increase in orders, chief executive Iwan Lukminto told Reuters.

Most of the new orders had come from local clothing factories manufacturing for global brands, he said. Lukminto did not say how much sales had been expected to grow this year before the virus outbreak.

Indonesia’s textile industry employs about 2 million people and relies largely on domestic supply chains that had not been disrupted by the outbreak so far.

Imported fibres and dye chemicals represent only a small portion of raw materials used by the sector, Lukminto said, while companies also import cotton from Australia and the United States, where shipments have not been affected.

Indonesia exported nearly $13 billion of textile products last year, chiefly to the United States and Middle East.

In addition to the coronavirus windfall, textile sales may also rise after the ratification of an Indonesia-Australia free trade agreement this year, under which Australia will remove a 5% import duty on textile products, Sutanto said.

The coronavirus has killed nearly 3,000 worldwide. Over 86,500 have been infected in China, where the virus originated, but it has also spread to more than 50 other countries, including Indonesia, which confirmed its first cases on Monday.

Textile industry players in Indonesia played down concerns over the spread of the virus, which they said would be limited by the country’s hot conditions. Cold weather has been known to boost transmission of similar viruses.

Indonesian authorities have also warned that slower economic growth in China could weaken growth in Southeast Asia’s biggest economy to 4.7% in 2020, compared with 5.02% in 2019. (Editing by Ed Davies; Editing by Jan Harvey)

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