Higher costs hurt textile exporters
Higher costs hurt textile exporters
JAKARTA (JP): Exports of Indonesia's textiles and textile-
related products has steadily declined in the last five years,
due to increasing production costs, the secretary-general of the
Indonesian Textile Association said yesterday.
Benny Soetrisno said during a hearing with the House of
Representatives' Commission VI here that the share of textiles
and textile-related products in the country's total exports
steadily declined from 17.5 percent in 1992 to 16.4 percent in
1993, and 14.1 percent in 1994 to 13.3 percent in 1995.
The value of textile exports was recorded at US$5.9 billion
(as compared to total exports of $33.9 billion) in 1992, $6
billion ($36.8 billion) in 1993, $5.6 billion ($40 billion) in
1994 and $6 billion ($45.4 billion) in 1995.
"The declining share of textiles and textile-related products
was due to their decreasing competitiveness against those
produced by two major competitors, Brazil and South Korea," Benny
told the hearing.
He said the cost structure of the Indonesian textile industry
is 57 percent for raw and auxiliary materials, as compared to 50
percent in Brazil and 48 percent in South Korea.
He added that interest rates in Indonesia are 16 percent per
annum, while those in Brazil and South Korea are 13 percent and
12 percent respectively.
Indonesia produced 1.5 million tons of textiles and textile-
related products in 1995, of which 52.75 percent was exported and
the remaining 47.25 percent was sold on the domestic market.
The government has set a target of $7 billion for textile
exports in 1996, $9 billion in 1997 and $12 billion in 1998.
"The government, therefore, should create a conducive climate
through fiscal and monetary policies and bureaucracy services to
enable the textile industry to reduce costs and achieve the
export targets," Benny said.
He said that $4.9 billion of new investments should have been
utilized this year for the replacement of old textile machines so
that the export targets could be achieved.
He complained about the existing legal and illegal levies
which have burdened the development of the industry. "All levies
have eroded the competitiveness of the textile industry," he
added.
Furthermore, said Benny, the quotas on Indonesian textile
exports imposed by the United States, Canada and European
countries have caused the decline in the exports' growth rate.
Meanwhile, another executive of the association, Haryadi
Sukamdani, told the hearing that a Ministry of Manpower
regulation requiring textile firms to abandon employment on the
basis of daily wages has also caused problems.
Haryadi added that the regulation has forced textile producers
to increase their costs by 36 percent.(kod)