Cable manufacturers expect better market

Cable manufacturers expect better market

JAKARTA (JP): Exports of wire rods, wires and cables are
expected to rise 7 percent this year, up from US$177 million last
year, the Indonesian Electric Cable Manufacturers Association
said yesterday.

Association chairman Kusudiarso Hadinoto said exports of these
goods were expected to be worth $190 million this year. Exports
went to the United States, Australia, Japan and Europe as well as
developing countries such as Sri Lanka, Thailand and Iran.

He would not give estimates for next year, but said the
association expected better prospects for the domestic market in
1997.

"We hope that next year, the (state electricity company) PT
PLN will no longer have liquidity problems so we can expect the
domestic market to be more responsive to our products," Hadinoto
told a press conference yesterday.

He was accompanied by association board members, including
executives from PT Putera Ometraco Electric, PT Sucaco, PT
Federal Mardhika Corporation and PT Voksel Electric.

Domestic demand for power cables is growing between 15 percent
and 17 percent a year while demand for telecommunication cables
is rising between 20 percent and 22 percent.

He said this year was difficult for power cable makers because
of PLN's liquidity problems in 1995.

PLN and state telecommunications firm PT Telkom are cable
producers' main customers.

Because of its financial problems, PLN often delays paying
suppliers. PLN also delays its cable-installation programs,
leaving lots of cables idle in its warehouses.

"This situation affects the cash flow of cable producers," he
said.

Hadinoto said the oversupply meant few big orders from PLN
this year.

"This caused power cable producers to invade customers on the
non-PLN market, which in fact is only 25 percent to 30 percent
the size of the PLN market," he said.

Hadinoto said there was still an oversupply of power cables.

He said from next year, PLN would implement "cooperation
agreements" with cable producers that had ISO-9000 certificates
for quality management. The agreements were basically long-term
contracts for cables supplies.

"Hopefully the agreements will include clauses on penalties to
be imposed on late supply (by producers) and late payment (by
PLN)," he said.

Hadinoto said telecommunication-cable producers would have to
start focusing their production next year on optic fiber
telephone lines, which would gradually replace conventional
copper cables.

The country has four optic-fiber cable factories, and two more
will begin production next year.

Rusmin Cahyadi, the director of Voksel Electric, said 20
percent to 30 percent of Telkom's new telephone lines planned for
the Seventh Five-Year Development Plan, which starts in 1999,
would be optic fiber.

The association, established 1972, has 32 members: 12 have
ISO-9000s certificates for quality management. (pwn)