By  on July 10, 2007

GENEVA — Safeguard quotas imposed on China by the U.S. and European Union in late 2005 have been a boon to Indonesia's apparel industry, according to a World Trade Organization report.

Indonesian apparel exports to the U.S. have performed better in categories restricted by the China safeguards, the report noted. During January to May 2006, exports in restraint items increased by 30.9 percent, to $975 million, compared with $745 million in shipments reported during the same period in 2005.

The study concludes that after the global quotas were scrapped on Jan. 1, 2005, Indonesia and other Asian suppliers, including China, increased collectively the volume of apparel shipments to the U.S. market by about 32 percent in value terms.

Indonesia posted a 20 percent increase in apparel exports, to $2.8 billion from January to May 2006, boosting market share to 4.2 percent from 3.7 percent the year before. In the process, Indonesia captured a larger share of the U.S. market, 5.2 percent compared with 3.9 percent during the period.

The report, prepared by the WTO for a review of Indonesia's trade, notes that in addition to increases stemming from the temporary quotas, the apparel industry "has a number of strengths, which should enable it to expand its share in international markets."

In 2005, Indonesia's textiles and apparel exports totaled $8.7 billion, making the industry the second-largest hard currency earner after petroleum. In 2006, Indonesia was ranked as the world's 21st-largest exporter in the sector, as merchandise shipments grew 21 percent, to $104 billion.

Indonesia's textiles and apparel industry, which includes a workforce of 1.2 million people and more than 4,500 factories, is "vertically integrated, encompassing almost every stage of production," the report stated.

Another competitive plus is its large and relatively cheap labor force and the industry's "proven capacity" to produce quality mid- to high-level items for export, the report added.

Herry Soetanto, Indonesia's director-general for international trade, told WTO delegates the economy grew by 5.5 percent last year and was on track to grow 6.3 percent in 2007.

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