The Indonesian government's Ministry of Industry plans to invest IDR285bn (US$31.07m) in restructuring the textile and clothing industry in 2007 after the House of Representatives agreed to finance the programme from next year's budget.

Aryanto Sagala, textile director of Multifarious Industries at the Ministry of Industry, told just-style: "The restructuring programme in principle is to help companies having problems with bank loan interest rates by paying 50% of the interest.

"We hope the programme can encourage investment in current technology and persuade banks to give credit to the industry."

According to the Ministry, loan interest rates of 18-19% are considered too high, and prevent many of the country's clothing companies from modernising their production equipment.

Due to limited funds, the new programme can only subsidise the purchase of new equipment worth up to IDR50bn for each company.

Aryanto told just-style: "The industry only subsidises loans to a maximum of IDR50bn for each company.

"So a company investing IDR75bn must pay the normal commercial interest for the remaining IDR25bn of the loan."
 
Ade Sudradjat, chairman of the Indonesia Textile Association in West Java, added: "There will be about US$306m investment in 2007 in the textile and clothing industry, while funds from the ministry only contribute 11% of the total investment."

By Baari La Inggi.