Bankruptcy on the rise
Bankruptcy on the rise
Rendi A. Witular, The Jakarta Post, Jakarta
The country's manufacturing sector was mired in gloom last year
as the number of bankruptcies jumped by 22 percent, making many
thousands jobless, the Central Bureau of Statistics (BPS) said.
In its latest corporate survey, a copy of which was made
available to The Jakarta Post, the BPS said that some 835 large
and medium manufacturing companies went bankrupt in 2002, up from
650 the previous year.
The agency added that 767 companies had to downsize their
operations, a 41 percent increase from the 447 in 2001.
The massive number of bankruptcies, downsizings and mergers
had caused some 138,088 people to be laid off, further worsening
the country's huge unemployment problem.
The number of jobless last year reached some 9.1 million,
according to official data.
The BPS did not provide any explanation for the higher
bankruptcy figures, but earlier reports said that the
manufacturing sector had been hit by various uncertainties both
at home and overseas.
On the domestic front, among of the negative factors were
labor disputes, rising production costs, security problems,
illegal charges, legal uncertainty and the smuggling into the
country of cheaper overseas-made products.
These problems had not only forced local companies to shut
down their operations, but a number of foreign firms had also
been forced to do same or relocate their businesses to
neighboring countries that offered better investment climates.
On the external front, the slowing down of the economies of
developed nations and growing competition from regional peers
were shrinking export markets for local manufacturers.
Labor-intensive sectors such as textiles, garments and leather
goods topped the bankruptcy list last year (242 companies went
bankrupt), followed by the food, beverage and tobacco sector
(215), and the wood, bamboo, rattan and willow sectors (143).
Business leader Sofjan Wanandi said that the latest BPS data
provided further evidence of the bad times being suffered by the
country's manufacturers.
"The government should focus more on resolving problems
hampering the sector instead of just dealing with the macro
economic situation," said Sofjan, who is also the chairman of the
National Economic Recovery Committee (KPEN).
Sofjan predicted that more manufacturing firms would collapse
as the government this year would be inclined to concentrate more
on preparing for the upcoming general election in mid 2004,
instead of focusing on reviving the manufacturing sector.
The government is targeting the economy to grow at 4 percent
this year, but experts have said that in order to create enough
jobs, growth must be at least 6 percent per annum.
The BPS report was based on a 2002 survey of more than 21,000
manufacturing firms across the country.
Head of the BPS industrial statistics division Rifa Rufiadi
said the survey was conducted for the agency's "Manufacturing
Industry Directory 2002" year book.
He explained that the agency distributed questionnaires to all
manufacturing firms in early 2002. If a firm did not return the
questionnaire, BPS personnel at the regency level checked whether
the firm was still operating or not.
The agency defines a large company as one that employs 100 or
more workers, while a medium firm has between 20 and 99 workers.
The BPS data also revealed that at the end of 2002 there were
19,696 manufacturing firms still operating.