Textile export earnings seen to drop about 35%<\/p>\n
JAKARTA (JP): A shortage of raw materials may cause the
\ncountry's textile export earnings to fall about 35 percent to
\nUS$4 billion this year from $6.2 billion in 1997, the Indonesian
\nTextile Association has predicted.<\/p>\n
The association's chairman, Bambang Riyadi Soegomo, said
\nyesterday the supply of imported materials had become scarce
\nbecause of financing problems.<\/p>\n
"Our condition is very bleak currently, since all cotton and
\npolyester supply is imported," Bambang, a member of the People's
\nConsultative Assembly (MPR), said after yesterday's general
\nsessions.<\/p>\n
About 95 percent of textile materials are made of imported
\ncotton, he said.<\/p>\n
Importing has become difficult for textile companies because
\nforeign banks will not accept letters of credit (L\/Cs) issued by
\nlocal banks, he said.<\/p>\n
The government's pledge to provide a facility which guarantees
\nexporters' L\/Cs for imported raw materials, had not come to the
\nrescue, he said.<\/p>\n
The pledges of several foreign countries to guarantee L\/Cs had
\nalso not materialized, he said.<\/p>\n
"Everything announced to the media about facilities and
\nguarantees for us have been mere promises, and are not applicable
\nat this point," he said.<\/p>\n
The monetary turmoil, prompted by a dramatic drop in the
\nrupiah's value against the dollar, triggered a crisis of
\nconfidence in Indonesia's frail banking sector following the
\ngovernment's closure of 16 insolvent private banks at the end of
\nlast year.<\/p>\n
International banks have been hesitant to accept letters of
\ncredit issued by local banks, and importers are forced to ask
\nlocal industries to finance their imports in cash.<\/p>\n
As a result, many textile producers have suffered a liquidity
\nproblem, he said.<\/p>\n
Bambang said the textile producers, which market most of their
\nproducts on the domestic market, faced more serious problems
\nbecause the plunge in the rupiah's value of about 70 percent
\nsince July last year, had caused an increase of about 300 percent
\nin rupiah-based prices of imported raw materials.<\/p>\n
"If the rupiah's value is set at Rp 5,000 to the dollar we
\ncould still manage, but if it is more than Rp 7,000 there is
\nnothing we could do."<\/p>\n
The rupiah closed at Rp 9,400 against the dollar at the close
\nof trading yesterday, down from about 2,500 last June.<\/p>\n
Bambang said members of the 8,000-strong association were home
\nindustries.<\/p>\n
Between 10 and 15 companies had already laid off about 200,000
\nemployees, he said.<\/p>\n
"We try to make laying off the last resort."<\/p>\n
He said he urged the companies to begin slashing their
\nproduction and reduce the shifts of employees instead of sacking
\nthem.<\/p>\n
For example, they could divide their employees into two
\ngroups, with each group working every other month, he said.<\/p>\n
"We could help a little with the raw materials, as long as
\nthey (the companies) reduce production," he said.<\/p>\n
"We have to evaluate the structure of our textile industry."
\n(das)<\/p>",
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"sponsor": "Okusi Associates",
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