Cluster Overview

Not only could the competitive edge of export products be developed through macro policy as fiscal, but also through micro policy as industrial development with the focus on the corporate level.

One of the industrial development policies is on the cluster-based industry. Cluster means that it is not only confined to the industrial center, which comprises homogenous business groups, but included as well nearby areas where there are thousands of companies inter-connected from the complimentary suppliers, researches, trainings, consultants, designs, marketer, ad distributors.

The cluster structure strength in short term is expected to have integrated activities in place among the players. Whereas in the mid and long terms, competitive edge has been on significant rise through:

1. Improvement in productivity & efficiency
1. Better accessibility
2. More integrated coordination
3. Best practice stimulation
2. Improvement in innovation
1. The emergence of supporting industries
2. Sustainable value creation
3. Improvement in better output performance
1. Better opportunities for new entrepreneurship
2. More efficient creation of product and service
3. Bigger scalability

Those positive benefits in the mid or long terms have urged NAFED to initiate the cluster-based industrial development in 2006. Since industrial development is not NAFED's competence, to initiate the program NAFED forges cooperation with the Department of Industry

Leather Cluster of Yogyakarta

Leather and its derivative products are of the Jogyakarta's favorite export products. Statistic data suggests that processed leather, leather gloves, and leather ready-to-use products sit at no 1,2.4 ranks of the Jogyakarta's export.

The province's export output relies on from small to large scale of 800 existing leather products makers. But at the moment, majority of all potentials are being developed through semi-traditional approach. Consequently, it is rarely found products with significant improvement in quality, diversification, as well as their market.

National Agency for Export Development (NAFED), one of the export directly -related stakeholders, has initiated to develop a cluster based leather craft industry in the Special Province of Jogyakarta.

It is expected, however, that cluster development in the leather industry will bolster the competitive edge of leather industry and its derivative products, increasing leather product export of the Special Province of Jogyakarta.

In relation with development, NAFED has made preparation and carried out activities as:

1. Socializing shared understandings on cluster either through Export Forum, media promotion, or lobbies with technically related departments, the Administration of Jogyakarta Special Province, related offices and other related parties.
2. Preparing financing related to investment on machineries and other needed supporting equipments
3. Inviting foreign experts with background specialization in leather products either design, production, or marketing, to give workshop on transfer of knowledge and skill.
4. Providing local facilitators stemming from multi-disciplinary sciences and organizations as stimulators and operators to speed up cluster development.
5. Providing leather product-related information on design or export destination market.