Local toymakers facing production problem

Local toymakers facing production problem

JAKARTA (JP): Local toy producers acknowledged on Wednesday
their low production capacity often forced them to reject orders
from overseas.

Umar, who owns U.D Umar, a wooden automotive toy company, said
his company received many orders from foreign buyers, including
ones from Australia, South Korea and Japan.

He said he was only able to partially meet the orders from
Australia due to his firm's low production capacity.

"The Australian buyers want to buy 300 units of my toys every
month, but I can only produce about 50 units per month. I could
not increase my production because it would need a lot of workers
and I could not afford it," he said on the sidelines of a toy
exhibition on Wednesday.

Most of the toymakers said it was difficult to secure bank
loans despite the government's pledge to provide cheap loans to
promising small and medium companies.

Umar recounted how he tried to obtain loans from state Bank
Rakyat Indonesia about two years ago, but found the complicated
bureaucratic procedures overwhelming.

Yenny Puspita Dewi, a marketing staff member of toy and
handicraft producer PT Sarinah International, said toy producers
needed funds to increase their production capacity and improve
quality amid rising prices of raw materials.

"But it is very difficult to obtain loans from banks, even for
an export-oriented company like us." She said 70 percent of her
products was exported to Singapore, Japan and Malaysia.

Eri, marketing director of toy producer PT Hamparan Ekonnusa
Hawa Indonesia, said his company could only meet orders from its
German buyers.

"We want to expand our business and sell our products to other
countries apart from Germany, but we have limited production
capacity."

National Agency for Export Development (BPEN) chairman
Gusmardi Bustami admitted local toy producers had difficulties in
meeting major orders.

"Small and medium companies are usually unable to mass-
produce. This is the hardest challenge to solve, because the
producers have not been accustomed to producing goods in big
quantities but of good quality," he said at the opening of the
exhibition.

Gusmardi admitted the local toy industry was burdened in
increasing exports due to the soaring prices of imported
materials and imposition of a high import tax.

He said the value of Indonesian toy exports dropped by 38
percent in the first eight months of the year to US$52.9 million,
compared to $84.2 million in same period last year.

Foreign exchange earnings from toy exports are estimated to
reach only $76 million this year, a 19.7 percent drop from $94.6
million in 1997.

Most of the exports are to the United States, Germany, France
and other European countries and Japan. Over 50 percent of the
exported items are stuffed toys.

Gusmardi said the toy industry was a prime candidate for
development because of fine prospects and its labor-intensive
nature.

"I think the government should lower the import duties on toy
products because this industry has a great multiplier effect and
becomes part of the social safety net due to its labor-intensive
characteristics."

Gusmardi said the international market for toys currently
reached $45 billion annually, with China the world's biggest
supplier with sales of $7 billion a year.

BPEN, in cooperation with the Ministry of Trade and Industry,
is holding the toy exhibition through Dec. 20. About 35
companies, mostly small and medium enterprises, are
participating.

The exhibition is expected to help the industry cope with
marketing problems encountered during the economic crisis,
Gusmardi said. (gis)