APGI to sue Ministry for quota manipulation

APGI to sue Ministry for quota manipulation

Abdul Khalik, The Jakarta Post, Jakarta

he Indonesian Textile Businesspeople's Association (APGI)
plans to file a lawsuit against the Ministry of Industry and
Trade and its key officials for allegedly manipulating the
textile quota system.

APGI chairman Natsir Mansyur revealed on Saturday that he had
collected data and evidence proving the ministry's top officials
had misused their positions in assigning textile quotas, which
had caused the industry a great loss.

"We have sufficient data to take the case to court. We will
submit the report after the legislative election, sometime next
week. However, we are still considering the right charges,"
Natsir told The Jakarta Post.

He added that the ministry and its officials had abused their
authority for years, by assigning textile quotas to companies
based on personal preferences, rather than the companies'
capabilities.

The ministry even allocate quotas to individuals who have
fictitious companies or no capacity to produce textiles at all,
Natsir said.

He argued that textile producers, in turn, had to buy textiles
from these individuals, resulting in higher production costs and
uncompetitive selling prices for their products on the
international market.

Natsir said that the industry's loss due to this practice
could reach hundreds of billions of U.S. dollars because the
total Indonesian quota was more than US$500 billion a year.

None of the ministry's top officials could be reached for
comments as of Sunday.

Textile-importing countries, such as the U.S., Canada, and
Europe, apply a quota system to several exporting countries,
including Indonesia, China, and Vietnam, to limit their textile
imports. Between 1974 and 1994 this trade barrier practice was
known as the Multifiber Arrangement (MFA).

The current quota system was introduced in January 1995 and
will end in January 2005, after which every textile-exporting
country will compete freely to gain markets in those countries.

The governmental body which has the responsibility to assign
quotas for local textile producers is the Ministry of Industry
and Trade's Directorate General of International Trade, which is
now headed by Sudar SA.

A textile analyst, Baari La Inggi, said that since the start
of the quota system, the government had not been transparent in
distributing the quotas, but nobody dared to question this unfair
practice, he said.

"It is a common knowledge to every businessman that the
allocation process is riddled with manipulation. However, no
businessman has the nerve to even discuss it openly. It is a good
thing that somebody now speaks up about it," said Baari.

He told The Post that the price of the quotas could be higher
than the production cost of textiles.

"Textile businessmen understand what to do if they need
quotas. Sometimes, we are willing to buy quotas at any price so
that we can maintain our business relations with our foreign
buyers," he said.

The murky quota allocation system has also been the reason why
the country's banking sector has channeled credits for the
textile sector, which is struggling to face tougher competition
from rivals in China and Vietnam.

A top banker recently said unless the problem was addressed,
banks won't issue credits for the industry, which is now in dire
needs of revamping its machinery.