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

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.