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The Indonesian furniture and craft industry has set a target to reach 6 billion US dollars in exports by 2031. However, industry leaders warn that achieving this goal requires overcoming significant challenges related to working capital and access to financing.
Abdul Sobur, Chairman of the Indonesian Furniture and Craft Industry Association (HIMKI), stated that current export values for the sector hover around 3 billion US dollars. To double this figure within the next few years, companies require greater financial support to manage production costs before receiving payments from international buyers.
According to Sobur, manufacturers must secure capital for raw materials, labor, certifications, and design development well in advance of receiving revenue. He noted that the current banking system often relies heavily on fixed asset collateral, which does not align with the operational realities of furniture exporters. Instead, he advocates for financing schemes based on purchase orders, contracts, and export receivables, supported by credit guarantees and export insurance.
HIMKI is calling on the Indonesian Export Financing Agency (LPEI) to develop more flexible financing models. Sobur suggested that such support should extend beyond large exporters to include small and medium-sized enterprises (IKMs) through aggregator schemes, ensuring that the entire supply chain remains supported.
While financing is a critical component, Sobur acknowledged that the industry faces additional hurdles, including high logistics costs, the need for sustainable raw materials, labor productivity, and global trade pressures. He emphasized that while capital is essential to fulfill orders, it must be paired with market development to ensure long-term sustainability.
The call for enhanced financial support aligns with broader government efforts to bolster domestic industries. Recently, officials have encouraged LPEI to strengthen financing for sectors facing intense global competition, including textiles, footwear, steel, and furniture, to ensure these industries remain viable in the international market.
Article and image source: ekbis.harianjogja.com
