API complains of rampant quota trading
Adianto P. Simamora, The Jakarta Post, Jakarta
The Indonesian Textile Association (API) urged the Ministry of Industry and Trade to disclose the name of companies holding textile export quotas for the U.S. market amid strong suspicions that the quotas were mostly controlled by brokers.
"We have asked the director general of international trade at the ministry to disclose this ... but there has been no response," Natsir Mansyur, an executive of the association, told The Jakarta Post.
He made the comment as textile firms were surprised to learn that 70 percent of the quotas for trouser and jeans products for the U.S. export market had already been filled during the first four months of this year, while there had been no significant increase in the production of the products among companies here.
"This is an unusual situation because so far we have not seen a sharp increase in the production of trousers in this country," he said.
Natsir said that the association was informed by the ministry that 21 textile firms had fulfilled 70 percent of the export quota, or exported the equivalent of 1.6 million dozen trousers and jeans.
The export quotas for these products are known as the 347 and 348 quota categories respectively.
By comparison, the fulfillment of the 347 and 348 categories during the same period last year was only around 23 percent.
Trading of export quotas by brokers has been rampant in the past, forcing real textile exporters to pay a hefty price to allow them to export their products particularly to the U.S. market, one of the country's major export destinations.
Natsir said that quotas were now being sold at around US$30 for every dozen export items, compared to only between $5 and $8 previously.
He said that at such a high price, textile firms were no longer be able to make sufficient profits in exporting their products.
He also feared that the brokers were selling the quotas to other countries via transshipment arrangements.
"We are afraid that the sharp rise in quota fulfillment is mainly due to transshipment practices where all the (export) documentation is produced in Indonesia but the trousers come from other countries," he said.
Natsir said that the trading of quotas would hamper the growth of the country's textile exports.
The U.S., Europe and Japan account for about 45 percent of Indonesia's textile exports, while the so called "non-quota countries", that is the countries of the Middle East, Latin America and Africa, take the remaining 55 percent.
Data from the Ministry of Industry and Trade shows that the export of textiles and textile products reached $7.6 billion last year compared to $8.2 billion in 2000.