High production costs hit small textile firms

High production costs hit small textile firms

JAKARTA (JP): Increasing production costs and weakening demand
have forced 10 percent of the textile producers in the Central
Java city of Pekalongan to shut down their factories and another
50 percent to slow down operation, an executive said.

Malul Akbar, chairman of the Association of Pekalongan Textile
Producers, said in a hearing with the House of Representatives
yesterday that production costs had been increasing in the last
few months due to the rocketing of the prices of materials and
the 11.11 percent rise of laborers' wages.

The association, according to Malul, groups 9,671 small-scale
waving, batik, fabric printing and garment entities in Pekalongan
and its surrounding areas, employing 110,000 people.

Malul explained to members of the House's Commission VI, which
is in charge of the manufacturing and energy industries, that the
prices of cotton, rayon, and polyester fibers increased by more
than 70 percent during the last six months. The price of cotton
fiber, for example, increased to Rp 1.4 million (US$633) per roll
this month from Rp 780,000 in January.

He said the wages of laborers had also increased in line with
the government's recent decision to raise the regional minimum
wage for workers in Central Java from Rp 2,700 per day to Rp
3,000 in April.

In response to Malul's complaints, members of the commission
suggested yesterday that the government lower import tariffs on
textile materials.

A commission member, Iskandar Manji, said imports of fibers
are now subject to duties of up to 10 percent.

"If there is no action from the government, hundreds of those
small textile companies are likely go out of business and
thousands of people will lose their jobs," he added.

"By lowering the tariffs, production costs will decrease and
the textile producers can sell their products more
competitively," he said.(31)