Business uncertainty deters foreign textile buyers

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)