Govt to provide incentives to boost textile exports

JAKARTA (JP): The government plans to provide financial incentives to textile companies to boost their exports.

Minister of Industry and Trade Tunky Ariwibowo said yesterday the government would provide credit and other financing facilities to financially troubled textile producers.

He said the government would also ease textile export quota procedures to facilitate export activities.

Speaking at a hearing with the House of Representatives, Tunky said the ministry was cooperating with Bank Indonesia and other banks to provide credit to textile companies in need of working capital.

"I have sent a list of company names in the textile industry which need additional working capital to Bank Indonesia, and it will pass the list to the involved commercial banks," he told House Commission V for industry, mining, trade, manpower, cooperatives and the environment.

He said the finance ministry had also established a pre- shipment facility for companies facing problems opening letters of credit for the import of raw materials.

Most of the country's textile and textile related companies have suffered serious financial problems due to the crisis, which has slashed the value of rupiah by about 75 percent since July.

The rupiah's sharp depreciation has not only caused an increase in the prices of imported raw materials by over 200 percent, but has also damaged the credibility of Indonesian companies overseas. Many letters of credit issued by local banks to back up imports made by local companies have also been rejected by foreign banks.

During the hearing, the minister said his ministry would further encourage local textile companies to sell their products in countries which did not impose import restrictions.

The ministry would try to improve access for Indonesian companies to "non-quota markets" such as Japan, the Middle East, Eastern Europe, Africa and Latin America by developing bilateral and international trade relations, he said.

Tunky said the ministry would also make adjustments in the management of its domestic export quotas of textiles.

The ministry will provide a special quota loan for textile exporters to export their products after the national quota had been fulfilled. The government would also allow for the reallocation of quotas as some companies have not been able to fully meet their quotas.

The Indonesian Textile Association has announced that its members earned US$7.5 billion from exports in 1997, up from $6.42 billion in 1996.

Indonesia exports most of its textile and textile-related products to the U.S., Japan, the United Kingdom and Germany. (das)