Hundreds of textile firms have money woes

JAKARTA (JP): Hundreds of small and middle-scale textile and textile-related companies are reportedly confronting serious financial problems due to higher operation costs from the sharp depreciation of the rupiah.

Indonesian Textile Association (API) secretary-general, Benny Soetrisno, said yesterday the currency crisis had caused the increase in prices of raw materials from between 12 percent to 25 percent.

"Textile companies, as a result, are unable to fully use their production capacities due to the higher production costs," he told Antara news agency during a textile seminar in Yogyakarta.

Most of API's 5,000 members are small and medium-scale companies.

Benny said the association had recommended that its members reduce production by at least 20 percent to enable them to survive.

"API also suggests that the ailing companies should cooperate with more healthy companies," he said.

Ministry of Industry and Trade Tunky Ariwibowo said last week that more than 200 local companies had registered for dollar loans to boost their working capital.

Provision of loans to local export-oriented firms is one of the government's efforts to boost the country's non-oil exports, he said.

Most of the companies which have applied for the loans are textile and textile related, he added.

"Most are from the textile industry because the industry is the most active exporter, and most of them are exporters with special status," he said.

Benny noted that the sharp drop in the value of the rupiah against the U.S. dollar, which has struck Indonesia since early July, made local products cheaper in overseas markets.

"Exporters are trying to sell as many of their products as possible to grab more dollars," he said, adding that national textile exports reached around 15 percent of total exports.

The export value of textile and textile-related product was targeted to reach around US$7.5 billion this year, up from last year's figure of $6.42 billion, he said.

Indonesia exports most of its textile and textile-related products to the U.S., Japan, the United Kingdom and Germany.(08)