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