Inefficiency causes fall in textile exports

Inefficiency causes fall in textile exports

JAKARTA (JP): The poor performance of Indonesia's services
sector was blamed yesterday for the declining growth of textile
and textile-product exports over the past few years .

The secretary-general of the Indonesian Textile Association,
Benny Soetrisno, said Indonesia's inefficient services sector was
likely to become a stumbling block when the sector was
liberalized in 2005.

"The textile industry can actually develop quite rapidly, but
the country's supporting services sector cannot keep up," he
said.

Benny said this was why textile producers would be glad to see
the ASEAN Free Trade Area come into effect before 2003 as
planned.

"Open it tomorrow, if necessary," he said.

He said a freer flow of trade and services within ASEAN would
let Indonesian textile manufacturers use more efficient,
professional and cheaper foreign services companies from
Singapore and Malaysia.

"I think it is important to integrate ASEAN's regional
strength because it would be a big advantage to everyone," he
said.

National textile companies currently use foreign fleets and
foreign air cargo services and prefer overseas loans to local
loans, Benny said.

"Based on a survey conducted by the association ... almost 90
percent of the services supporting the textile industry are
conducted by foreign trading companies," he said.

So, although the industry was one of the country's leading
foreign currency earners, it was also a large foreign currency
spender because it had to pay for many foreign services, Benny
said.

Earlier this year the government said textile and textile
product exports rose 10.5 percent to US$6.85 billion last year
from $6.2 billion in 1995, the highest growth in the last five
years.

Indonesia's textile exports, which make up 15 percent of total
exports, have fluctuated since the early 1990s.

The value of textile exports rose from $4.01 billion in 1991
to $5.95 billion in 1992 and $6.18 billion in 1993.

But they dropped 6.2 percent to $5.79 billion in 1993 before
rebounding to $6.2 billion in 1995.

To encourage the textile industry's growth and exports, the
government has announced tax, customs and banking breaks for
textile exporters.

Benny said textile makers had to face changing textile quota
rules, annual but unpredictable increases in worker salaries,
lengthy export licensing and documentation procedures, regular
increases in public services bills and overlapping fees.

A senior advisor to the association, Chamroel Djafri, said
Indonesia's public services sector would have a tough time when
the Uruguay Round requires the services sector to be opened up in
2005.

"How, for example, can you expect a small textile manufacturer
to develop when a single phone call it makes to a customer in
Europe costs as much as the salary of 15 of its workers?" he
asked.

Benny said that by 2005 at the latest, Indonesia's private
services companies should revitalize themselves to compete with
foreign companies.

He said state-owned services companies should seek a benchmark
so services carried out in Indonesia met international standards.

"Benchmarking should be easy for state-owned companies because
they have one owner -- the government -- and thus, one vision,"
he said.

"But I think what is going on now is more complicated. Until
now I still can't see a common vision from all government offices
and officials on how to improve the performance of the textile
industry," he said. (pwn)