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)