Garment producers cut back production by up to 60 percent

JAKARTA (JP): The country's garment producers have been slashing their output by between 40 percent and 60 percent to cope with monetary crisis which has battered the country for more than one year, an official said Wednesday.

The Ministry of Industry and Trade's Director General of Various Industries Doddy Soepardy said the decline in production would certainly lead to a decrease in the country's garment exports.

According to official data, the overall value of garment exports dropped by 20 percent to US$2.88 billion last year from $3.58 billion in 1996 as a direct result of the monetary crisis which first hit the region, including Indonesia, in the middle of last year.

"Anyway, despite the monetary crisis, we are still optimistic that through continued exhibitions businesspeople will find more chances to market their products," Doddy was quoted by Antara as saying Wednesday at an exhibition of export quality garments at the ministry.

The exhibition, which opened on Wednesday and will last until Sunday, features 29 clothing and textile companies.

Doddy would not say why garment manufacturers had slashed production, but earlier reports said the country's garment industry faced difficulties in getting sufficient raw materials, especially cotton and rayon fabrics.

The closure of many textile factories in Java due to the monetary crisis has caused a fabric shortage.

Textile producers have stopped production owing to the inability to import raw materials.

Local exporters experienced months of problems in importing raw materials due to the rejection of local letters of credit (L/Cs) by overseas banks in the wake of low confidence in domestic banks.

Overseas credit lines have recently been reestablished following L/C guarantees by various foreign governments and the country's central bank.

Analysts say high interest rates have also created cash flow difficulties for many exporters.

Despite the problems, according to ministry data, the country's textile exports rose in value by 13.56 percent to $2.42 billion in the first four months of the year, from $2.14 billion in the same period last year. (jsk)