JAKARTA (TheInsiderStories) – PT Sri Rejeki Isman Tbk (IDX: SRIL) or Sritex has the potential to reap export US$1billion from a trade war between the United States (US) and China, said the senior executive as quoted by Bloomberg today (10/03). In the first half (1H) of 2019, the textile producer claimed their sales to the US and Latin America rose around 3.2 times.
In an official statement, president director of the company, Iwan Setiawan Lukminto noted, during January – July, total exports from the two regions recorded 13.6 percent of total export sales or amounting to US$377.70 million. This amount increased from same period in 2018 worth of $15.98 million
He revealed, One of the biggest player in US wants to move their export destination from China to Indonesia However, he refused to provide further information on the deal.
The trade war, said Lukminto, forced global companies to move their production outside of China, which for decades has been a prime location. Some companies are even trying to secure their supply chain to other locations such as Taiwan, Vietnam and Bangladesh, to reduce tariffs on goods bound from US.
Lukminto plans to increase the company’ capacity to one fifth starting next year to meet the increasing demand. The business potential gained by Sritex is good news considering that Indonesia has experienced a decline in exports for the last 10 months.
Therefore, the government has reduced this year’ growth forecast to 5.1 percent from 5.3 percent. The World Bank report revealed that in 2018 out of 33 Chinese factories that were relocating out of China, as many as 23 factories were relocating to Vietnam, the rest were to Malaysia, Mexico, and others. While Indonesia was not even looked at by Chinese investors.
Indonesian President Joko Widodo was unable to hide his disappointment with the classic problem which Indonesia had not yet been able to resolve. The problem is investment regulation.
On the other hand, Sritex‘ business potential is good news considering that the country’s textile industry has indeed been under pressure this year which has led to mass layoffs and factory closures. The Indonesian Textile Association recorded nine textile factories closed due to competition from imported products in the period 2018-2019.
In the 1H of 2019, the manufacturer recorded a profit of $63.25 million, up 12.3 percent from $56.33 million as of June 2018. The sales up by 16.2 percent, from $543.76 million as of June 2018 to $631.64 million as of June 2019.
While, cost of goods sold also increased by 12.27 percent, from $445.8 million to $500.52 million. The company’ assets recorded at $1.42 billion as of June 2019, up 4.2 percent from US $ 1.36 billion as of December 2018.
Sritex is a textile company from Sukoharjo which was founded in 1966. The company previously made clothes for several big brands including J.C. Penney Co., Guess Inc., Walmart Inc. and H&M. With the increasing tension of the trade war between China and the US, Sritex is getting increased orders from a number of the world’s major fashion brands who want to relocate their garment suppliers from China.
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