Govt blamed for uncertainty in textile industry

JAKARTA (JP): The Indonesian Federation of Batik Cooperatives says the current uncertainty in the textile industry is partly a result of a lack of support for the industry from the government.

The federation's chairman, Noorbasha Djunaidi, said on Saturday that the government had never had a firm policy with which to guide the country's textile industry.

On the other hand, textile producers had also failed in coordinating the marketing of their products, he said.

"Indonesia has never been able to properly organize the marketing of its textile products," he told the Antara news agency in an interview.

The government and associations of textile-related producers had also failed to establish a strong platform to better facilitate sales of textile products both at home and overseas, he said.

"Many textile producers have never, for example, used important marketing indicators such as projections on demand growth in selling their products," he said.

In addition to a shortage of raw materials, the poor marketing strategy had also played a role, he said, in the reported collapses of many small textile companies.

A majority of small textile companies in the important textile producing province of Central Java are reported to have collapsed as a result of a shortage of raw materials.

Independence

Observers have claimed that the acute shortage of raw materials, which has also hit small-scale producers in other provinces, has taken place because of the limited number of "independent" producers of raw materials.

Most of the upstream activities of the country's textile manufacturing industry are controlled by large investors, who mostly use the upstream products for their own downstream operations.

Noorbasha, the former caretaker of the heavily indebted Kanindotex group of textile firms, said that the acute shortage of textile raw materials occurred only after the government abolished its protection on small-scale firms in the mid-1970s.

Before then, the Investment Coordinating Board did not allow big companies to operate in downstream activities if there were already small companies producing the same products.

At that time, he said, small-scale companies had also received support from PN Sandang, the state-owned textile producer, which supplied them with raw materials at lower prices.

Noorbasha said another reason for the shortage of raw materials was the imbalance between the number of companies operating upstream as compared with those operating in finishing and garment production.

Another factor in the current uncertainty in the textile industry, he said, was the inability of banks to assess the viability of textile companies.

He said many banks did not base their credit assessments on the viability of the business of a company but rather on the person behind the firm. The banks did so because of a lack of knowledge about the textile industry, he said.

The result is that many textile companies use credit obtained for ulterior purposes, leaving their textile factories unattended, he added. (hen)