Business uncertainty deters foreign textile buyers

JAKARTA (JP): Many buyers of Indonesian textiles and textile products have placed their orders with other Asian countries due to growing business uncertainty amid the country's political instability, a senior official at the Ministry of Industry and Trade said on Saturday.

The director of exports for manufactured and mining products, Sudar SA, said many textile importers had cut their orders on fears that companies here would be unable to meet their requirements.

"Some foreign buyers are looking to other producing countries. But it doesn't mean that the sun has set on our textile industry," he said.

According to data from the ministry, Indonesia's textile exports reached US$1.35 billion in the January to March period this year, a drop of 26.6 percent from $1.83 billion in the same period last year.

Despite the drop in value, exports of textiles and textile- products still rank first in terms of value compared to the exportation of other industrial products.

Sudar said Indonesian textiles and textile-products were very cheap as a result of the sharp depreciation of the rupiah against the U.S. dollar. Nevertheless, importers have been discouraged from placing middle and long-term orders with local manufacturers for fear the country's political instability could disrupt production.

But he predicted foreign orders would increase in the July to August period, which was normally peak season for textile orders.

"Orders will likely increase in the July-August period but it will slow down again near the end of this year. If it does not increase, we could consider our textile industry to be in big trouble," he said.

Sudar said the country's exports of textiles and textile- products reached $7.3 billion last year. However, he said his office was unable at this time to predict this year's exports.

"We will be lucky if this year we can export at the same level as last year's trade," he said.

Indonesian Textile Association (API) secretary-general Irwandy Muslim told The Jakarta Post that the association predicted exports at $8 billion this year.

Irwandy said most of Indonesia's traditional buyers would remain loyal.

"Some buyers are still optimistic because political upheavals of a worse scale have also happened in several other parts of the world," he said.

Some local producers have started securing foreign orders for winter clothes, he said.

"Our traditional foreign buyers acknowledge that the quality of our fabrics is one of the best in the world. If they want to buy from other sellers they have to bear additional costs for checking their quality to ensure that it is at least as good as ours," he said.

The economic crisis has seen the emergence of new Indonesian players in the international market.

"Many textile producers, which previously mainly concentrated on the domestic market, have started promoting sales overseas. They are aggressively looking for new markets, especially countries which do not impose quotas," he said.

Indonesia's textile exports have been shipped to 130 countries this year, compared to 85 countries in 1990, Irwandy said, citing the most important markets as Europe and the United States.

Irwandy predicted the value of the country's textile exports could reach between $10 billion to $12 billion after the turn of the century.

"But this will depend on the government's ability to provide adequate trade financing," Irwandy said.(gis)