Deregulation needed to boost textile exports

JAKARTA (JP): Deregulatory measures, simplification of procedures and heightened productivity are needed to increase textile exports, an industry spokesman says.

A deputy chairman of the Indonesian Textile Association (API), Chamroel Djafri, said that efficiency improvements would become more important in the coming decade. This was because quota systems adopted by a number of major importers under the Multi- Fiber Arrangement (MFA) will be gradually eliminated within 10 years, as per last month's conclusion of the GATT negotiations in Uruguay.

The elimination of the quota system will increase competition among textile exporters to penetrate formerly protected markets in industrial countries, he said.

"In 1993, the growth of our textile exports was practically zero," he said. "Textile exports will continue leveling off in the coming years if we do not address factors which have increased production and marketing costs."

According to the Central Bureau of Statistics, Indonesia's textiles and textile products exports increased by 19.6 percent to 692,357 tons last year from 578,726 tons in 1992 and by two percent in value to US$6.18 billion from $6.06 billion.

Textiles and textile products are the country's second biggest earner of foreign exchange after oil and gas. Last year's exports of oil and gas reached $8.74 billion, down by 8.6 percent from 10.67 billion in 1992.

Gradual elimination

Chamroel said the gradual elimination of quota systems will affect Indonesia's textile exports because its traditional importers may buy more products from newly emerging exporters, such as Pakistan and Bangladesh, which can offer lower prices.

Sjahrir, chairman of Padi & Kapas Foundation, said the inefficiency of the government's bureaucracy, the inconsistency of policies issued by different government institutions and stiff implementation of ruling on minimum wages have also affected the textile industry.

The tough, new enforcement of minimum wage laws, which requires textile manufacturers to raise their minimum daily wage from Rp 2,600 (US$1.20) to Rp 3,800 per day, has forced many textile factories to close down, he said.

Chamroel said the hike of minimum wages is considered too high by textile producers because the productivity of their workers is generally low.

The deputy made his comments during a seminar on the General Agreement on Tariffs and Trade (GATT) yesterday. (01)