Reviving the Handicraft Sector in Bali : Reviving the Handicraft Sector in Bali

Abstract

The International Finance Corporation (IFC) Program for Eastern Indonesian Small and Medium Enterprise (SME) Development (IFC-PENSA) launched its Handicraft Export Promotion Program in January 2005. The program ran for 2.5 years, and its ambition was to revive the handicraft industry in Bali with a demonstration effect filtering through to other handicraft regions of Indonesia. The handicraft sector in Indonesia employs over 3 million poor and disadvantaged people, including approximately 400,000 in Bali. It is among the five top-priority sectors for the Indonesian government. Handicraft manufacture in Bali is predominantly a cottage industry, and a paucity of medium local or foreign-owned businesses deprives the sector of the scale and financial resources vital for competing against countries such as China, Vietnam, or Thailand in export markets. In the late 1990s, the country was the second-largest handicraft exporter in the world. After the turn of the century, however, Indonesia had lost its competitive edge, mainly due to the Bali bombing and much stronger competition from other Asian countries. As a result, the value of handicraft exports dropped from some $2 billion a year in 1998 to $400 million in 2002.