Nganjuk Textile Industry Survives in the Middle of the World Economic Turbulence

SURABAYA - PT Mitra Saruta Indonesia continues to carry out export activities for textile products even though the global conflict situation is still ongoing until now.

The main director of PT Mitra Saruta Indonesia, Hoo Yanto Andrian, said that the turmoil in the international market due to the conflict in the Middle East could still be overcome by his party.

Yanto explained that his company has more than 30 years of experience in the export sector, so it is accustomed to dealing with changes in world market conditions and the current situation is not new for his company.

"The current condition (has) been experienced by us before. So we are used to dealing with such situations," he said at the Finance Ministry's Site Visit and Media Briefing, quoted on Friday, April 17.

Yanto revealed that the company's main markets are still in Japan and the United States, and that it is now increasingly active in expanding its marketing reach, both in traditional markets and new regions.

"Japan is the main destination for our glove products, the second is America, and there are still 39 other export markets for both of our products, yarn, and gloves," he said.

He added that exports have also reached South Africa and Egypt, as well as a number of European countries such as Portugal and Spain which remain regular markets.

Yanto also touched on the resilience of his company during the Covid-19 pandemic, because at that time, exports had dropped by 50 percent, but in four months were able to recover by 40-80 percent, and almost returned to 90 percent within a year.

According to him, this recovery ability is supported by the existence of alternative products that can meet market needs at a more affordable price.

"Our recovery rate against these risks is quite good. Why can it happen? Because of the alternative products we have," he explained.

He added that the company started exporting about 2-3 years after it was established in 1989, and initially, production was carried out in Surabaya using about 20 small-scale industrial machines.

Yanto said that currently, PT Mitra Saruta employs around 1,700 employees and in its production process, the company uses recycled materials, with a processing capacity of around 3,000 tons of waste every month.

He added that only about 10 percent of the materials were imported, while the rest were obtained from more than 100 SMEs that were waste suppliers.

"Every month we process around 3,000 tons of recycled waste, only about 10 percent of which we import. The relationship with the existing SMEs is because the nature of this waste is not only that we can get it directly from the company so there are more than 100 SMEs that supply our waste," he said.

He also emphasized that every month, the company exports almost 100 containers, with the support of financing from the Indonesian Export Financing Agency (LPEI) which has been established for a decade.

According to Yanto, the main impact of the current global conflict is the increase in energy costs, especially for production logistics needs. However, because the company has implemented the principle of sustainability since several years ago, operations can still run stably.

"If what happened today is what we experienced during the war in Iran, the war in Ukraine with Russia. Well, lately, these business partners have been a little difficult to determine the increase because of the direct and indirect impact on the increase in energy," he said.

Meanwhile, the Head of the NIA & Strategic Assignment Division of LPEI, Berlianto Wibowo, emphasized the importance of the government's role in supporting export activities through various special programs and one of them is the National Interest Account financing scheme which is different from commercial financing.

"The government provides one of the programs that provides benefits through Indonesia Eximbank. This is different from commercial financing, namely the National Interest Account or special export assignment," he said.

This program includes nine initiatives, including efforts to diversify markets to Africa, South Asia, the Middle East, Eastern Europe, and Latin America. In addition, LPEI also has a special program to increase the competitiveness of SMEs in the global market.

"This is what gives how SMEs have competitiveness in producing production," he said.

LPEI also provides trade credit insurance facilities to protect exporters from the risk of default due to geopolitical conditions, so that with this protection, business actors can be safer in carrying out exports.

"So that the export perpetrators are safe when exporting goods to a country. Because we already know whether the payment is risky or not," he explained.

On the other hand, the Director of Extension, Service, and Public Relations of the Directorate General of Taxes, Inge Diana Rismawanti, highlighted the importance of maintaining the liquidity of exporters.

"To maintain the liquidity of these exporters, there may be a scheme or cost prepared by LPEI, such as credit relaxation or restructuring," he said.

He said that schemes such as credit relaxation or restructuring could be additional solutions to help business actors survive amid global uncertainty.

According to him, liquidity support is a crucial factor for exporters to remain able to operate optimally even though they face various global economic risks.