Phelim Kyne, Dow Jones\/Jakarta<\/p>\n
Garments smuggled from China are flooding the Indonesian market
\nand hurting the sales of a local unit of Japan's Toray Industries
\nInc., a senior company executive said recently.<\/p>\n
Smuggled garments undercut the prices of products of local
\nfactories which buy polyester materials from PT Indonesia Toray
\nSynthetics, Indonesia Toray Group chief executive representative
\nYukihiro Sugimoto told Dow Jones Newswires.<\/p>\n
\"It's said that over 60 percent of the garments in the
\nIndonesian market is imported goods, mostly smuggled and that's
\nmostly coming from mainland China,\" Sugimoto said.<\/p>\n
\"That's very much damaging local demand (for our products).\"<\/p>\n
Indonesia has become a destination for a steadily increasing
\nflow of smuggled garments from China over the past three years
\nthat have created a \"serious problem\" for Indonesia Toray's
\nbottom line, Sugimoto said, without elaborating.<\/p>\n
Toray Industries is Japan's biggest synthetic fiber producer
\nand a major supplier of components for Boeing Co.'s new 787
\nDreamliner jetliner.<\/p>\n
PT Indonesia Toray Synthetics is the only one of the company's
\nfive Indonesia-based manufacturers that produces primarily for
\nthe domestic market. The four other firms export 80 percent of
\ntheir output.<\/p>\n
Sugimoto spoke on the sidelines of a meeting between
\nrepresentatives of the Indonesian Synthetic Fiber Makers
\nAssociation (APSYFI) and Indonesia's Minister of Industry Andung
\nA. Nitimihardja.<\/p>\n
APSYFI data indicate that synthetic fiber producers
\ncontributed about US$1 billion of the total $7.2 billion of
\nIndonesia's garment and textile exports in 2004.<\/p>\n
Andung told APSYFI representatives that Indonesia's current
\nregulatory barrier against smuggled goods \"isn't good enough\" and
\nthat his ministry would work to bolster official anti-smuggling
\nefforts.<\/p>\n
The impact of smuggling on Indonesia Toray's operations
\nreflects both inadequate official action to limit the entry of
\nillegally-shipped goods into Indonesia as well as China's
\nascension as a global garment and textile export powerhouse.<\/p>\n
Textile and garment exporters in China have invested billions
\nin recent years to upgrade their facilities and expand capacity.
\nThat investment, together with highly-productive and low-cost
\nlabor will in the long term help to deliver the bulk of global
\nmarket share to the country, analysts say.<\/p>\n
China recorded a 14 percent on year increase in overall
\ntextile and garment exports to $3.74 million in January, despite
\nexport duties imposed by the Ministry of Commerce on 148 textile
\nand apparel items starting Jan. 1 designed to slow a massive
\nexport jump. The China Securities Journal said in March that the
\ncountry's garment and textile exports to the U.S. and European
\nUnion in January rose a much stronger 70 percent on year.<\/p>\n
Those increases are linked to the end-2004 expiry of the
\nglobal Multifiber Agreement, or MFA, that allowed the U.S. and
\nthe E.U. to support the development of textile industries
\nthroughout the developing world through the issuance of annual
\nexport quotas. In the post-quota environment, China's cost and
\nproduction advantages are allowing the country to control a
\nprogressively larger piece of the global garment and textile
\nexport market.<\/p>\n
The possibility of U.S. and E.U. import tariffs to slow the
\ngrowth in China's garment exports is helping to fuel smuggling of
\ngarments for sale in neighboring Asian countries, local producers
\ncomplain.<\/p>\n
Smuggling is compounding the aversion of foreign investors to
\nfunnel funds into Indonesia, Sugimoto said. Indonesia recorded a
\n26 percent decline in approved foreign investment to $10.3
\nbillion in 2004 due to concerns about rampant corruption, poor
\ninfrastructure and an unpredictable judiciary.<\/p>\n
\"Mainland China is the number one country to invest in or to
\nbuy from or manufacture products in (and) I think Indonesia
\nshould be the second country (for foreign investment), but
\nbecause of some reasons including smuggling...it's not the second
\ncountry yet,\" Sugimoto said.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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