Although textile industry and textile products belong to the strategic
sub sector of manufacturing industry in Indonesia, they are facing
pro-blems on the availability of energy, old production machines, and
the flooding of imported products into the domestic market. This study is
aimed to analyze the efficiency and productivity as performance
indicators and how the efficiency and import penetration affect the
productivity of textile industry and textile products. The methods of
data analysis used in this research are divided in two phases. The first
phase, the non-metric approach of Data Envelopment Analysis (DEA) is
applied to measure the efficiency and productivity. Secondly, the fixed
effect model of econometric regression approach is used to find out the
effects of efficiency and import penetration on the productivity of
textile industry and textile products. The result shows that the average
level of efficiency of textile industry and textile products during
the
period of 2004 – 2008 is about 40 percent with a growth rate of average
productivity increases 2.4 percent. Whereas, the econometric estimation
results indicate that the increase of efficiency will positively and
significantly affect the productivity of textile industry and textile
products. On the other hand, the increase of import penetration will
negatively affect the productivity of this industry.