Govt urged to go all out to prevent more bankruptcies<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government must quickly move to mend the \"classic problems\"
\nhampering investment and should provide incentives to businesses
\nto prevent more manufacturing companies from going bankrupt or
\ndownsizing operations, businessmen and analysts said on
\nWednesday.<\/p>\n
Secretary General of the Indonesian Textile Association (API)
\nIndra Ibrahim told The Jakarta Post that the bankruptcy of many
\nmanufacturing companies was triggered by classic problems that
\nthe government was unable or unwilling to address.<\/p>\n
\"The problems affecting the manufacturing sector have been
\nscreamed out loud by most businesspeople since 1998 such as
\nbribes, smuggling and legal uncertainty. However, to this point,
\nthose problems remain and it seems like the government has just
\ngiven up,\" said Indra.<\/p>\n
Noted economist Faisal Basri concurred and said the government
\nshould shift its priorities from macroeconomics to addressing all
\nthe micro problems.<\/p>\n
\"The current macroeconomic condition is fine. However, I am
\namazed how corruption by civil servants just keeps getting worse,
\nwhich pushes up the cost of the economy. And the government just
\nturns a blind eye to these corrupt bureaucrats,\" said Faisal.<\/p>\n
Indra and Faisal were commenting on the rising bankruptcy
\namong medium- and large-scale manufacturing companies after a
\nstudy was completed by the Central Bureau of Statistics (BPS).<\/p>\n
The BPS reported that the number of bankruptcies among large-
\nand medium-sized manufacturing companies jumped by 22 percent to
\n835 companies in 2002, up from 650 the previous year.<\/p>\n
The data also showed that 767 companies downsized their
\noperations last year, a 41 percent increase from the 447 in 2001.<\/p>\n
Aside from the \"classic\" domestic problems, Indra spoke about,
\nthe bankruptcy of many textile companies was also caused by
\nexternal factors such as the slowing down of the global economy
\nand growing competition from other developing countries such as
\nChina and Vietnam, both of which have higher productivity and
\nlower costs.<\/p>\n
However, Indra said that domestic problems only exacerbated
\nthe situation, and thus reduced the competitiveness of Indonesian
\nproducts on the world market.<\/p>\n
Indra suggested that as long as the government could not solve
\nthe corruption it should introduce other incentives to domestic
\nexport-oriented companies that were losing their competitiveness.<\/p>\n
The incentives, added Indra, could include soft loans and tax
\nbreaks such as the exemption of the 10 percent value-added tax
\nfor imported raw materials for export-oriented industries, such
\nas the textile sector.<\/p>\n
Labor-intensive manufacturers such as textile, garment and
\nleather companies topped the bankruptcy list last year (242
\ncompanies going bankrupt), followed by the food, beverage and
\ntobacco sector (215), and the wood, bamboo, rattan and willow
\nsectors (143).<\/p>\n
BPS also recorded that the bankruptcies, downsizing and
\nmergers of operations caused some 130,000 employee layoffs.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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