Another bleak year for the textile industry<\/p>\n
Hendarsyah Tarmizi, Contributor, Jakarta<\/p>\n
\"Seriously depressed\" might be the right words to describe the
\ncondition of the country's ailing textile and apparel industry.<\/p>\n
In the overseas market, many local manufacturers can no longer
\ncompete with their foreign rivals, while at home, many buyers
\nprefer to buy less expensive imported products.<\/p>\n
\"2003 could really be the hardest time for Indonesian textile
\nand apparel producers,\" the chairman of the Association of the
\nIndonesian Textiles (API) Benny Soetrisno said.<\/p>\n
The inability of many Indonesian textile and garment producers
\nto compete with foreign producers is mostly due to their
\ninefficient production facilities. It is no longer a secret that
\nmost local producers have to use old and technologically obsolete
\nmachinery due to the lack of financing to catch up with the new
\ntechnology.<\/p>\n
With such old machinery, it is difficult for them to compete
\nwith manufacturers in neighboring countries, especially those
\noriginating from newly emerged textile exporters such as Thailand
\nand Vietnam, who have applied far more sophisticated technology,
\nwhich can help them not only to cut production costs but also to
\nproduce high quality textile products.<\/p>\n
But producers said that the blame should also be addressed to
\nthe government which had failed to provide a business climate
\nconducive to stimulation of the country's textile and apparel
\nindustry.<\/p>\n
Business players in the sector have blamed the government for
\nits policies such as those related to fuel, labor and import
\nduties, all of which make production costs higher. The high
\ninterest rate of bank loans is also one of the problems making
\nIndonesian garment products less competitive.<\/p>\n
Their request for lower import tariffs when buying machinery
\nfrom overseas have never been followed up on by the government.
\nThe customs office has, instead, been accused of taking bribes to
\nallow smuggled textile products into the country.<\/p>\n
Benny said that it was now time for the government to review
\nits policy related to the country's textile industry. Otherwise,
\nmore and more textile and garment producers will close down and
\ntens of thousands more jobs will be lost this year.<\/p>\n
The textile and apparel industry which employ more than one
\nmillion workers is one of the important pillars in the country's
\neconomy.<\/p>\n
The sector is one of the main contributors of the country's
\nforeign exchange earnings. Exports from the sector reached a peak
\nat US$8.2 billion in 2000 but the fiercer competition in the
\ninternational market had caused a continued decline in export
\nearnings. Exports of textile and apparel products dropped to
\nUS$7.6 billion in 2001 and could experience a further drop in
\n2002. During the period from January to August, the value of
\ntextile and apparel exports were recorded only at about US$4.6
\nbillion. The total value for all of 2002 might be 10 percent
\nlower compared to last year's amount.<\/p>\n
The industry estimates that the export will further decline by
\n20 percent this year.<\/p>\n
Benny said that entering the export market was much more
\ndifficult nowadays as Indonesia's main competitors such as
\nThailand and Vietnam had gained more control on the U.S. and
\nEuropean markets.<\/p>\n
\"Vietnam's textile exports to the U.S. has reached more than
\nUS$450 million a year from merely US$40 million a few years ago,\"
\nhe said.<\/p>\n
With the mounting problems, Indonesia's textile and apparel
\nproducers which at present supply about four percent of the
\nworld's demand worth about US$350 billion a year will further
\nlose its market if the government fails to produce effective
\nmeasures to stimulate the industry.<\/p>\n
\"The problem faced by Indonesian textile and garment producers
\nis not merely how to compete with their foreign rivals but also
\nto beat the smuggled products,\" he said.<\/p>\n
In the past, many garment producers took the advantage of the
\nsurge in the local market to off set the lower demand from
\nforeign buyers, Benny said. \"But the increase in the cheap
\nimported products make the business more uncertain,\" he added.<\/p>\n
The demand in the local market has significantly increased
\nduring the past four years. In 2001, the local market absorbed
\nabout 705 tons of garment products, a substantial increase from
\n674 tons in 2000 and 645 tons in 1999. The volume of the textile
\nproducts supplied in the local continued to increase in 2002.
\nFrom January to August, the volume had already reached 735 tons
\nexceeding the total volume booked in 2001.<\/p>\n
However, a further influx of smuggled products could pose
\nanother threat to the industry.<\/p>\n
\"In 2002, some 19,000 people lost their jobs in the textile
\nsector. I am afraid the number of the lay-offs will increase to
\n300,000 people this year with such mounting problem,\" he said.<\/p>\n
Besides the high-cost factors, many foreign buyers switched to
\nmanufacturers in other Asian countries due to concerns over the
\nunfavorable security situation. They fear that growing labor
\ndisputes combined with news of bombings will cause a delay in the
\nshipment of their orders.<\/p>\n
Non-economic factors would further hurt the Indonesian textile
\nproducers with the rising specter of war in the Middle East.<\/p>\n
\"If the United States and its allies attacked Iraq, there
\nwould be a sharp drop in the order from Arab countries,\" said
\nAndi Anang, the chairman of the textile association's branch in
\nCentral Java.<\/p>\n
He added that a war would not only result in the increase in
\nthe delivery cost resulting from the rise in the insurance
\npremium but could also reduce the overall demand from the Middle
\nEast, one of the important buyers of Indonesian's garment
\nproducts.<\/p>\n
Local producers could redirect their exports to Asian
\ncountries but be able to compete in this region, they would have
\nto go head to head with Vietnam and China, which are able for a
\nvariety of reasons to offer big discounts to their buyers, he
\nsaid.<\/p>\n
The possible attack on Iraq would further worsen the gloomy
\noutlook in the country's textile and apparel industry. The
\ngovernment's help is surely needed to help this business sector
\nface this difficult situation.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/another-bleak-year-for-the-textile-industry-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}