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)