Islamic Lifestyle 

Indonesia’s modest fashion companies need tax incentives and funding to compete globally, says HijUp CEO

| 29 May, 2016
 Yosi Winsosa
Indonesia’s modest fashion companies need tax incentives and funding to compete globally, says HijUp CEO
Photo: Collection by designer Ria Miranda at Muslim Fashion Festival 2016 / Rizki Meirino

JAKARTA – Indonesia’s modest fashion exporters need more funding to scale their businesses in order to compete at the global level, Diajeng Lestari, CEO of HijUp.com, told Salaam Gateway.

In China, the world’s largest clothing exporter, companies can produce at scale as the government extends tax incentives, said Lestari. In contrast, Indonesia’s exporters must struggle alone to run their businesses.

“[The Indonesian] government needs to give us such incentives so we can scale up our business. This incentive means additional capital for us,” Lestari said.

Once exporters can reduce their production costs they will have more output to distribute in the market including within the country, she added. This will help Indonesian businesses compete with Chinese, UK and Japanese modest wear clothing that have started to penetrate local markets, including Jakarta’s popular fashion and textiles centre Tanah Abang, and other malls. About 80 percent of products that flow into Tanah Abang originate from China, according to Lestari.

Lestari’s HijUp.com is Indonesia’s biggest modest fashion e-commerce shop. It works with more than 200 local Muslim fashion brands and is supported by hundreds of start-up companies, said Lestari.

Nadya Nizar, founder of modest fashion brand Nadjani Indonesia, agrees with Lestari that the lack of funding limits business capitalization. At present Nadjani can only manage a maximum of 2,000 pieces per month while demand exceeds production capacity.

“We have previously received an order of 10,000 pieces in one invoice. What can I say? We can only produce 2,000 pieces a month,” she said.

A lack of capital is not the only challenge in the industry, she said. Expert curation, marketing and education are the others. “We have many good designers, but that’s not enough,” said Nizar.

One of Indonesia’s leading designers, Ali Charisma, owner of the eponymous fashion brand, says high production costs are also attributable to marketing and promotion needs, including fashion shows and their related costs, which are not cheap. According to Charisma, it costs hundreds of millions of rupiah for each fashion show.

“Consistency matters [more] for us than the quantity (of exports). 30 pieces a month is okay but it must be steady,” he said.

Ali Charisma is not a dedicated modest fashion brand but its business serves as an example for Indonesia’s young modest fashion companies looking to export overseas. Established in 1998, Ali Charisma exports to major markets such as Australia, Europe, Korea, Middle East, and Shanghai. The company’s annual turnover falls between $10 million and $50 million. According to Charisma, their highest export number was 5,000 pieces a year.

“Every market has its own demand. Australia and Europe for example, they like sportswear. The Middle East [looks] more for evening gowns, Korea for ready to wear, Shanghai for unique designs. I think some designs inspired by local themes could be stronger and interesting for the global market,” he said.

Charisma is not concerned with issues that may affect Islamic modest fashion businesses, such as halal fabrics, but said, “Indeed, it’s a plus we have standards for halal fabrics especially for markets where Muslims are the majority.” Charisma also serves as national chairman of industry body the Indonesian Fashion Chamber.

MUSLIM FASHION FESTIVAL 2016

Addressing these business challenges, the Indonesian Fashion Chamber (IFC) and design firm PT Ditali Cipta Kreatif collaborated with Hijabers Mom Community to hold the first Muslim Fashion Festival in Jakarta last week.

The festival’s project director Taruna Kusmayadi said the event was organized to support local brands. According to Kusmayadi, around 200 brands, including 15 representatives from Malaysia Fashion Week and designers from Bangladesh, Italy, Russia, Turkey, and United Arab Emirates grouped under the Islamic Fashion and Design Council (IFDC) participated in the B2B and B2C/retail event.

“We hope many local brands with original designs, not just copycats, and ready to wear lines will benefit from the event. We’ve seen so many nice products, but nice products with a high number of orders are rare,” he said.

Muslim Fashion Festival 2016 showcased more than 18 runway shows from Indonesian designers including Deden Siswanto, Dian Pelangi, Dini Pratiwi Ira, Iva Schwan, Poppy Theodorin, Puteri Hasanah, Rosmawary Ismail, Sad Indah, Sofie, and Yuanita Sabrina.

Companies paid 75 million to 150 million rupiah ($11,000) for runway shows, while booth rentals were 8 million rupiah to 12 million rupiah ($880) each. The festival cost the organizers 7 billion rupiah, said Kusmayadi, who estimates profits of 100 million rupiah.

($1 = 13,600 Indonesian rupiah)

© SalaamGateway.com 2016

 

 

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