Cirebon rattan industry on the brink of collapse, 32,000 workers laid off

Nana Rukmana, The Jakarta Post, Cirebon

A top rattan industry player stressed that slow business in the past two months had resulted in layoffs of 32,000 workers in Cirebon. If immediate measures were not adopted by the government, more layoffs could follow, warned the chairman of the Indonesian Handicraft and Furniture Association's Cirebon Branch, Sumarca.

"Rattan exports in the past two months have decreased 60 percent due to tough competition from Vietnam and China," Sumarca said on Saturday.

At the end of June, the export of rattan to other countries such as the United States, Japan and West European countries reached some 2,000 containers a month, but in July, exports dropped drastically to 700 containers. "And in August, exports dropped to 300 containers," lamented Sumarca.

The slump in exports has occurred because foreign buyers have simply stopped buying rattan and furniture from Cirebon's many manufacturers as China and Vietnam are apparently more attractive for buyers.

"The impact has been severe for our industry. From some 400,000 workers, well over 30,000 have been laid off since July," reiterated Sumarca.

Before the export drop off, there were some 1,200 rattan companies operating in Cirebon and the surrounding areas, but now only 20 percent were still operating, he said.

The bankrupt rattan industry has been caused by the government-issued ministerial decree that freed Indonesian companies to export raw rattan (not yet processed or made into furniture). The decree became effective on June 30.

The export of raw materials has benefited China and Vietnam as they mostly get the cheap rattan raw materials from Indonesia, said Sumarca. Those two countries have been able to produce lower priced rattan furniture thanks to efficient companies and bureaucracy, thus outcompeting Indonesian manufacturers as they vie for global buyers.