Industry Profie: Spinning industry in Indonesia

MARKET INTELLIGENCE REPORT ON

DEVELOPMENT OF SPINNING INDUSTRY IN INDONESIA

October 2009

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Profile of main players

Indorama

PT Indo-Rama Synthetics is a foreign investment (PMA) company established in 1975 by. S.P. Lohia. The company operates in yarn spinning industry producing polyester fiber. In 1990, Indorama went public selling 42% of its shares to the public.

The products of Indorama include Textured Yarn of Polyester of Synthetic Filament - Man-Made Filaments, yarn of polyester of synthetic filament – man made filament, high tenacity yarn of polyester of synthetic filament – man made filament, woven fabrics of synthetic staple fibers – man made staple fibers.

Indorama started operation by building a factory over a 67-hectare plot of land in Purwakarta. Indorama has an annual production capacity of 270,000 tons of Spun Blended Yarn per year 30 million tons of 100% Polyester Filament Grey Fabrics also per year.

Later it built a new factory over a 50-hectare plot of land in Cempaka, 15 km from Purwakarta. The new factory has 2 units of yarn spinning plant, one specially to produce Sewing Thread Yarn (100% polyester) and another to produce 100% Combed Cottons Spun Yarns with a production capacity of 9,000 tons. It also has a factory in Bandung with a production capacity of 22 million meters of dyed and printed 100%- Polyester Filament Fabrics.

The machines used at the factories of Indorama include cutting-edge technology provided in cooperation with its principals - Du Point (USA), Zimmer, Trutzschler & Schlafhorst (Germany), Toyobo, Teijin Seiki, Toyoda and Murata (Japan). Indorama has built own power generating plant with a capacity of 60 MW coming on line in 2006 to guarantee power supply for its factories.

Indorama received the certificate of ISO 9001:2000 for Quality Management System and the certificate of OEKOTEX for its products of yarn and fiber. It has exported its products to various countries including Australia, European Union and the United States.

Currently polyester yarns contribute 73% to its sales and spinning products account for 21%. Indorama is the world’s largest exporter of Filament Yarns, Staple Fiber & PET Resin with around 93 countries of destination. In 2008, Indorama reported exports valued at US$ 365.47million, and its sales on the domestic market were valued at US$ 193.08 million.

Apac Inti Corpora

PT Apac Inti Corpora is a producer yarn and textiles. It operates in yarn spinning and fabric weaving industry. Apac is the largest textile maker in the world with production facilities located at a 247-hectare plot of land in Semarang, Central Java. Apac has 14 units of factory employing 14,000 workers. It operates integrated facilities including weaving and spinning factories using modern technology.

The company has a production capacity of 480,000 bales of yarns (1Bale = 181.44 kg) per year, 80 million meters of grey fabrics, 6 million meters of finished textiles and 60 million yards of denim cloth per year.

Apac’s products are known with the brand of “APACINTI”. Its products include Yarns, Greige cloth, and Finished and Denim cloth. Apac has exported its products to around 70 countries. It exports 70% of its production mainly to North America, South America, Europe, Asia, Africa and Australia. Its exports are valued at around US$ 238 million per year.

Early 2008, Apac Inti Corpora cooperated with PT Dayaindo Resources International Tbk to build a coal fired power plant (PLTU). Apac Inti has relied on diesel machines for its textile factories. The new power plant is to reduce the use of the expensive diesel oil.

Construction of the power plant started in 2009 to be completed in 2011. The plant has a capacity of 45 MW in three units of 15 MW. The power plant is estimated to cost US$ 45 million.

Panasia Group

The company group has two subsidiaries PT. Sinar Pantja Djaja (SPD) and PT. Fiberindo Inti Prima (FIP) – operating in spinning industry. SPD located in Semarang, Central Java, has a production capacity of 120,000 spindles, and FIP in Tangerang has a production capacity of 60,000 spindles

SPD is one of the country’s largest exporters of yarns. Its products include 100% RS viscose Ne 30’s, 100% RS polyester Ne 30’s, Polyester viscose Ne 30’s, Ne 30/2 and Polyester cottons Ne 30’s. The export oriented subsidiaries have exported yarn products to various countries including the United States, Brazil, Germany, Mexico, Egypt and South Korea.

Unitex

Unitex was established in 1971 as a PMA company with Marubeni from Japan holding 25.23% of the shares. The company located in Bogor, West Java, operates in integrated textile industry with spinning and weaving factories. Unitex started operating in weaving industry before it built its spinning plant with 36 sets of machines in 1972.

In 1982, Unitex went public listing in the Jakarta Stock Exchange and selling 43.2% of its shares. in 1990, the company expanded its spinning factories now having 17 units of yarn dyeing machines.

In 2009, Unitex, anticipating an increase in market demand in the coming years, planned to increase its production capacity. It has secured a loan without interest from one of its shareholders Unitika Ltd from Japan.

In September 2008, Unitex reported sales valued at Rp 109.1 billion with net interest of Rp 68.05 billion. The profit was attributable mainly to Rp 104.1 billion debts write off by its largest shareholder. In 2009, the company hopes to post Rp 60 billion in net profit. To reach its target, the company plans to expand sales to countries like Japan, Europe and the United States.

PT. Industri Sandang Nusantara and PT. Primissima are two state companies operating in spinning and fabric industries. The government plans to privatize PT Industri Sandang Nusantara through strategic sales or initial public offering to improve its performance. The government also plans divestment of its shares in PT Primissima through tender offer.

PT. Industri Sandang Nusantara was established in 1965. It has a spinning plant with 408,496 spindles. PT. Primissima was established in 1971 as a joint venture between the government and Gabungan Koperasi Batik Indonesia (GKBI). The government’s participation is in the form of a spinning unit and weaving unit as a grant from the Dutch government. GKBI provides land, and cost for the construction and capital. Primissima has an installed capacity of 2,580 tons of spun yarns per year.

The factory of the company is located in Yogyakarta producing yarns and 100% grew cloth. The company has received the certificate of ISO 9001: 2000 for good quality of products.

Production up 7.1% per year

In the period of 2004-2008, the country’s production of spun yarns grew 7.1% per year, from 1,692,000 tons in 2004 to 2,199,000 tons in 2009.

The highest growth in production was recorded in 2006 - up 15.3% to 1,872,000 tons from 1,623,000 tons in the previous year. The production grew further to 2,129,000 tons in 2007 and to 2,199,000 tons in 2008.

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