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Mr Sung Pui Man

I have been in Indonesia since 1974 and have been through the various ups and downs of the country. When I came here from Taiwan, the textile industry was just beginning at the start of the period of Suharto from 1969. Then, it started from a minimum production base and today it is a large scale industry.

We began on a small scale in the upstream textile sector such as weaving and spinning, since then we have also moved downstream into garments. Now we engage in weaving, knitting, dyeing and finishing until the final garment so we are one of the few fully integrated textile companies in Indonesia.

Right now we are mainly in the synthetic field such as nylon spinning and are the second largest in this in Indonesia. Our weaving capacity is also in the top ten in terms of production capacity. Our garments are mainly exported to Europe and Germany in particular. Germany has remained quite healthy and stable during the crisis. Our garments go to high end brands and currently we are in discussion with brands such as Armani and Hugo Boss. At the lower end of the market, we cannot compete with China in terms of price so we do not target this area.

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Mr Sung Pui Man

We have never stopped even when the market has been bad. Every year we upgrade ourselves as the technology in the textile sector keeps improving. In the last few years, attracting investment in the textile industry in Indonesia has been very difficult as it has been thought of as a ‘sunset industry’ yet I do not believe it is so.

In terms of strategy, there are plenty of new technologies coming out as well as new materials and innovations to be found. Since we are fully integrated, from the raw materials to finished garments, this gives us a real advantage by having direct contact with the end consumer to get quick feedback. If you are not integrated then you have to rely on others for information that they may not want to share with you. This is why every year we are always introducing new products, entering new markets and bringing in new technology.

Another aspect of our success is that we are very conservative. Frankly after the crisis in 1998, we did suffer but we paid back all our debts to our creditors. Since then we have been keen not to borrow too much to avoid the situation ever occurring again.

In terms of products, I have entered into new product areas within textiles that are not garments such as curtains, elastic and socks. I also think this is a way to stay competitive within the industry. We have the facilities here so we are developing this in house to stay ahead of our competitors.

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Mr Sung Pui Man

Our garments are mainly exported to Germany, only a small amount of raw materials are exported to Europe as there are very few manufacturers left there. We export a lot to Turkey and Mexico which then goes to North America. Bangladesh, Vietnam, Cambodia and Hong Kong are other markets that we supply our raw materials to and they produce the garments there to export to consumer markets.

Today, many consumer markets have slowed down such as in Europe yet people do still need to buy garments such as jackets as these are basic essential so there is still business to be done there. The USA is a market that we have not exported to directly before.

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Mr Sung Pui Man

Manufacturers are focusing more on the domestic market in Indonesia as there has been a slow down abroad. New investors are therefore interested in this and also because they believe labour is abundant and cheap in Indonesia. Salaries have increased but it is still competitive and the availability of labour is there compared to China’s coastal regions.

With regards to the recent labour protests, it showed that the government is weak and this issue will most likely arise again. For new investors, I would therefore point out as a major consideration that labour prices are increasing and opening a factory is a major challenge too. Therefore if an investor is just coming to Indonesia for the cheap labour then I would advise against it as they would have to move again in a few years time. It is interesting as a manufacturing base for the long term because of the domestic market here.

The infrastructure is very poor as well; the government recently passed a law regarding land acquisition to improve the construction of infrastructure. There is no MRT and as you can see from the congestion in Jakarta, transport can be very costly. This makes the hidden costs of doing business in Indonesia very high which new investors may not be aware of. Again, I advise that new investors focus on the domestic market and not just export. The government regulations do not prohibit you from doing business locally as they did in China at the beginning, unless you are in a bonded area.