Korean firm bemoans govt's new policy

Korean firm bemoans govt's new policy

As a Korean company engaged in yarn spinning, PT Hanil
Indonesia was set up in 1992 with a US$70 million investment in
Boyolali, Central Java. With a capacity of 64,800 spindles, our
firm employs 2,000 workers and exports 90 percent of its
products, and reserves 10 percent for domestic supply.

Despite the various difficulties so far, we have managed to
survive thanks to the support of the Indonesian government and
local community. However, with the government policy of Aug. 1,
2005 on the industrial fuel price increase, our company will
definitely be unable to operate.

At present, the world market is undergoing tight competition
with a cost-price difference of $1-$2cts/kg. The global textile
market is controlled by Chinese firms. Companies are aiming for
the price of $1ct/kg, so that they strive to reduce their cost
price by $1ct in order to be competitive.

Chinese companies have become our main rivals. China this year
faces no particular cost rises and its latest yuan devaluation
only causes a $1ct cost increase to competitors in China. In this
way, Chinese firms can still overcome its impact and carry on
their business operation.

In our view, the abrupt 149 percent fuel price hike creates a
great burden and major losses will be borne by manufacturing
industries in Indonesia. If the government understands the actual
situation of exporting firms today, it will surely create serious
troubles, resulting from the fuel price policy.

Therefore, we would like to request that the fuel price
increase be reviewed because the policy can cause the industrial
sector, especially the textile industry, to come to a halt, which
will certainly give rise to large-scale unemployment and social
issues.

PARK CHANG JUN, President Director, PT Hanil Indonesia, Jakarta