Global Business Guide Indonesia

Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills Nagasakti Kurnia Textile Mills
Nagasakti Kurnia Textile Mills | Mr Alexander Foe
Mr Alexander Foe

There are many big opportunities to be taken advantage of on the international stage, especially given the context of many textile factories in China shutting down due to rising labour costs.

Mr Alexander Foe, President Director

PT. Nagasakti Kurnia Textile Mills has a long history in Indonesia as a leading uniform fabric manufacturer. What more can you tell us about your company’s background as well as its main strategies going forward?

This company was founded by my father in 1982 during the textile industry’s golden age. Having been established as a textile weaving factory with only 150 employees, we have enjoyed considerable growth over the years to become a vertically integrated textiles firm with over 1,000 employees and an average monthly production of more than 2 million meters. As the second generation from my family to take upon the primary leadership role, I have had to contend with the present day reality of tough competition from countries such as China and Vietnam. Our main strategy has thus been to streamline our product portfolio to focus on the manufacture of uniform fabrics, which has long been our area of specialty. Achieving growth in today’s textile industry requires a close understanding of your company’s competitive advantages and a willingness to allocate resources towards making the most of these advantages.

How does PT. Nagasakti Textile Mills differentiate itself within a competitive local textile industry?

Our company is very much committed to investing in new machinery, which is important given that we operate within a capital-intensive industry. This machinery allows for greater automation and increased efficiency, and provides us with an advantage over our competitors that have been hesitant to modernize and take a defensive approach amidst a challenging business environment for textile businesses.

What is your outlook for the continued development of Indonesia’s textile industry?

Many people perceive textiles in Indonesia to be a sunset industry. From our experience and observations, we know that this is not the case. However, it is true that the industry is currently facing two major challenges. The first of these challenges is that many local textile firms have struggled to transition from the first generation to the second. The vast majority of these companies have difficulties in passing the baton to the next generation of leadership in the sense that they block or resist changes put forward by the younger generation, who often attend school overseas and come back with new ideas on how to run the company. One of the biggest hurdles to the continued success of Indonesia’s textile industry is therefore unrelated to any macro factors and is instead closely linked to internal operations at the company-level.

The second biggest problem faced by textile companies in Indonesia is that many of them had an unbalanced debt to equity ratio. These businesses were thus ill-prepared to compete following the rise of competition from China.

Much is expected of the new government to improve upon the business climate in Indonesia. What should the new administration prioritize in spurring the development of the textile industry?

It is important to us that the new government maintains strong trade relations with the US, because many textile companies here rely on this market for exports. The lack of a trade agreement between these countries means that we are hit with bigger taxes than countries such as Malaysia and Korea when exporting to the US.

Should no major developments take place in this arena, our industry is fortunate to have a sizable local consumer base of rising purchasing power that we can tap into.

In addition to the United States, which markets have you identified as your key targets from an international point of view?

For now our focus is still on the domestic market, as has been the case for the past decade. However, the recent decline of the rupiah has also encouraged us to pursue export opportunities in countries such as Japan and Malaysia. In truth, there are many big opportunities to be taken advantage of on the international stage, especially given the context of many textile factories in China shutting down due to rising labour costs and a move towards gadgets as the focus for manufacturing. This brings about new hope that Indonesia could assert itself as the global hub for textile manufacturing as a country that is already a mature producer of this type of product.

We see potential in also exporting to China and intend to develop specialized products such as anti-stain and mosquito-repellant fabrics to best tap into this market.

Beyond investing in new machinery, what can you tell us about PT. Nagasakti Kurnia Textile Mill’s plans to innovate and introduce new products?

Manufacturing uniform fabrics is not a line of work in which much changes with regards to new trends and styles. Our product range has therefore stayed relatively constant, as we primarily supply uniform fabrics for elementary schools and high schools. We also manufacture fabrics for employee uniforms for companies such as Air Asia and Pertamina, in addition to the air force. As such, our innovation is focused solely on improving efficiency, usually through investment in new physical capital.

How is your company positioned towards working with international investors and foreign partners?

We are open to this type of opportunity and are looking into the possibility of going public between 2015 and 2016 to attract new investors. This IPO will fund the development of an industrial estate in Bandung upon which we plan to establish eco-friendly manufacturing facilities and lessen our dependence on PLN. We also plan to move further upstream through the opening of new spinning mill facilities.

Our company welcomes opportunities to cooperate with foreign companies able to bring in capital and technology. One of the merits of our company is that we are always looking to learn, and as such working with a partner able to provide knowhow is also of interest to us.

As a final message, what would you like Global Business Guide’s readers to remember about Indonesia?

We welcome people to invest in Indonesia’s textile industry to take advantage of its transition into a sunrise phase on the back of rising global demand and less local competition caused by companies looking to exit. Those that persist and stay true to a long-term mindset will thrive in this new business landscape for textile companies in Indonesia.