Indonesia losing competitive edge in world textile
Indonesia losing competitive edge in world textile
JAKARTA (JP): Local textile producers say Indonesia's textiles
and textile-related products have lost their competitive edge on
international markets due to their high production costs.
They explained at a hearing with Commission VI of the House of
Representatives yesterday that components supporting the high
costs include rises in electricity rates, interest rates, labor
wages as well as raw material prices.
The producers represented at the hearing, chaired by Oedianto
of the Armed Force faction, included PT Texmaco Jaya, PT Argo
Pantes, PT Great River Industries and PT Leading Garment
Industries -- all listed on the Jakarta Stock Exchange.
Syafioen of PT Great River said the most irritating element in
the production costs is this month's 7.6 percent hike of
electricity billing rates, which will be followed by periodic
rate increases every three months, while the services provided by
the state-owned electricity company PT PLN are still bellow par.
"Look how many losses we bear because of sudden power black-
outs," Syafioen said. "On the one hand, we are fined if we are
late in paying our electricity bills. But when there are black-
outs, nobody can fine PLN. Is that fair?."
Musa of Argo Pantes said the country's high interest rates
have put textile companies in difficulties. "Our interest rates
are among the highest in Asia," he said.
He proposed that the government help find bank credits with
lower rates for export-oriented textile producers so that
Indonesia could better compete against new emerging textile
exporting countries, such as China, India, Bangladesh, Sri Lanka
and Vietnam.
Labor
Eddy T.P. Yo of Leading Garment specified that current labor
costs in Indonesia are the highest among the emerging countries.
He explained that labor costs in Indonesia are US$0.40 per
hour, as compared to $0.20 in China and only $0.10 in Vietnam,
while the productivity of Indonesia's laborers is the lowest
among the three.
Commenting on the government's plan to increase the local
minimum wages by 15 percent to Rp 4,350 ($2) per day for the
greater Jakarta area next year, Eddy predicted there would be a
number of companies going out of business.
A number of legislators at the commission contended that the
government-set wage standards have to be enforced properly and
textile producers should support them because they are meant to
raise the welfare of workers.
"I personally support the government's move to raise the
welfare of workers, but please understand our conditions as well
because we are plundered everywhere," Eddy said, responding to
the legislators' contention.
He did not explain the plundering but many businessmen have
complained that they have to pay illegal levies for various
bureaucratic procedures.
He said local textile producers also have to bear the sharp
increases of raw material prices, which average at 30 percent
annually, while the annual increases of their sale prices average
only five percent.
During the first six months of this year, Indonesia's exports
of textiles and textile-related products declined by 8.5 percent
to $3.3 billion from the same period last year.
Chamroel Djafrie of the Indonesian Textile Association said
recently that textile exports have recovered from the set-backs
during the second semester of this year. (rid)