Textile sector needs $4.9m to upgrade machinery<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
The country's textile industry needs some US$4.9 million to
\nupgrade or replace old machinery in a bid to boost production,
\naccording to an executive of the Indonesian Textile Association
\n(API).<\/p>\n
API executive director Indra Ibrahim said on Tuesday that
\nabout 60 percent of the existing textile machinery had been in
\nuse for more than 15 years and needed immediate replacement.<\/p>\n
"Many textile companies can not replace their old machinery
\ndue to a lack of working capital," Indra said.<\/p>\n
Domestic banks are reluctant to provide working capital to the
\nmanufacturing sector because of their weak capital condition and
\nthe continuing high risk associated with the real sector.<\/p>\n
The government is preparing a revitalization strategy for four
\nkey industries, namely textile, electronics, footwear and pulp
\nand paper, to help increase exports and create more jobs.<\/p>\n
The recovery of these four industries is expected to create
\n350,000 new jobs and avoid mass layoffs.<\/p>\n
Textiles are one of Indonesia's major non-oil and gas export
\nproducts. The sector employs some 1.2 million people.<\/p>\n
API previously said that export revenue this year would
\nincrease to $8 billion from $7.6 billion last year.<\/p>\n
The government has set up the Indonesian Recovery Fund (IRF)
\nto seek funding for the revitalization program.<\/p>\n
Subagyo MM, director for textile and textile products at the
\nMinistry of Industry and Trade, said the ministry was currently
\nin talks with Bank Indonesia to seek ways to provide the needed
\nfunds for the revitalization of the textile sector.<\/p>\n
He was optimistic that the $4.9 million funds needed by
\nmembers of the textile association would become available.<\/p>\n
"We are still discussing the financing scheme with Bank
\nIndonesia and API," Subagyo told reporters after speaking at a
\nseminar on textiles.<\/p>\n
He did not elaborate on from where the funds would come.<\/p>\n
But Indra warned that the government must immediately improve
\nthe local business climate to encourage investors to provide
\nfunding for the revitalization program.<\/p>\n
"Investors are still reluctant to invest due to various
\nuncertainties," he said.<\/p>\n
Indra said the local textile industry would continue to suffer
\nunless the government took measures to improve security and
\nsocial conditions at home.<\/p>\n
Earlier reports said that foreign buyers had been turning to
\nother textile producing countries to ensure the timely delivery
\nof products.<\/p>\n
Labor strikes have at times disrupted the supply of textile
\nproducts for export.<\/p>\n
Stronger export performance is important to help the country
\nexport its way out of the current economic hardships. The
\nphenomenal economic growth of around 4.8 percent in 2000 was
\nlargely contributed by record high export revenue.<\/p>",
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"sponsor": "Okusi Associates",
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