10,000 jobless as 67 textile firms collapse

Yuli Tri Suwarni, The Jakarta Post, Bandung

At least 67 textile companies have had to stop operations in the West Java capital of Bandung this year due to drastic decreases in orders and rising operational costs, businesspeople said on Friday.

The closures had forced around 10,000 workers to lose their jobs, they added.

Ade Sudradjat, the deputy chairman of West Java's Indonesian Textiles Association (API), said most of the collapsed companies were operated by foreign investors and produced clothing.

Many of them had relocated their factories to Cambodia, Vietnam and China, while some others had moved to Central Java, he added.

"In those countries, political and security conditions are more stable and the cost of labor and electricity is cheaper," Ade told journalists in Bandung.

Citing an example, he explained that the price of electricity for industry was seven U.S. cents per KWH here, while in Vietnam it was only 4.2 U.S. cents per KWH.

Ade also complained about the increasing minimum wage in Bandung, which was set at Rp 538,000 (US$63) per month, while in Central Java the minimum wage was only around Rp 300,000 per month.

Currently, businesspeople and labor organizations in Bandung are embroiled in a dispute over the local municipal administration's decision to increase the city's 2004 minimum wage to Rp 565,000 per month.

The businesspeople support the decision by Bandung Mayor Dede Rosada, but the labor unions oppose the increase, saying it was still less than the minimum living cost of Rp 643,000 per month.

"If the minimum wage is raised too much, we won't be able to pay it. Our companies will go bankrupt. What's the point of that?" Ade said.

The case was being dealt with by the head of the West Java manpower and transmigration office, Sukarto Karnen. He said the minimum wage should be enough to cover the local minimum cost of living.

Ade said that currently the production of textile companies in West Java was less than 60 percent of installed capacity.

This was caused by decreasing volumes of textile exports over the last few years.

In 2000, textile exports reached US$8 million in West Java, but the figure decreased to US$6.8 billion in 2002.

"Next year, with Indonesia holding general elections and the free textile quota starting to be implemented, it is likely that more textile companies will close," Ade added.

Bandung is the country's largest textile production center. It hosts more than 1,000 textile firms, or 60 percent of the total number of around 1,800 textile factories across Indonesia.