Deregulation needed to boost textile exports

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)