No fun for toy makers; government policies causing bankruptcies
No fun for toy makers; government policies causing bankruptcies
Adianto P. Simamora, The Jakarta Post, Jakarta
Some 60 local toy makers went bankrupt since the regional
economic crisis hit the country in late 1997, while the remaining
40 are now struggling hard to survive, according to the
Indonesian Toy Association (APMI).
APMI chairman Widjanarko Tjokroadisumarto said the collapse of
toy companies was due mainly to unfavorable government policies,
rendering them unable to compete with overseas products,
particularly from China.
"The current situation is very difficult for us because our
toys are now more expensive than those made in China, both in the
local market and overseas. We are now simply struggling to
survive," Widjanarko told The Jakarta Post recently.
Indonesia exports almost 80 percent of toys produced to the
U.S. and European countries.
"In the U.S. market, the price of Indonesia-made toys is 30
percent higher than those from China," executive of the
Association Jack Sutanto added.
Meanwhile, cheaper imported toys from China had also flooded
the local market, he said.
"I reckon about 80 percent of toys sold in the local market
are imported from China," Jack said, adding that the China-made
products were 50 percent cheaper than local ones.
He said that most imported toys from China were categorized as
rejects.
"I don't know whether these imported toys are smuggled or not
but most of them (toys) are reject Chinese products," said Jack.
Widjanarko put the blame on a number of government policies,
including a high minimum wage policy, unfavorable labor
regulations and a high interest rate environment. He said those
"crazy" policies had left toy makers less competitive against
overseas products.
He added that the minimum wage hike had caused labor costs to
soar, forcing some companies either to lay off workers or shut
down their operations.
"For example, we now employ only 600 people, compared with
1,100 previously," said Widjanarko, who is also the owner of PT
Ramashinta Citra Kreasi.
"This (wage policy) is suicidal; Indonesia is the only country
that has increased workers' wages by four times the rate of
inflation," he added.
"Therefore, I would not be surprised if more toys from China
entered the local market both legally and illegally," Widjanarko
said.
Indonesian toys have become more expensive as some 50 percent
of the raw materials used are imported.
Widjanarko said that about five toy companies from Indonesia
had relocated their factories to China and Vietnam, both of which
had a more supportive business climate.
"One of the five companies is now able to book annual sales of
up to US$30 million, compared with only $3 million when it
operated in Indonesia," he said.
Indonesia's toy exports were worth about $213 million in 1996,
the figure falling sharply to only $72.8 million in 1999.
"We expect this year's exports to decline to $100 million,
from $152 million in 2001," Widjanarko said.
Minister of Trade and Industry Rini Soewandi has included the
toy industry in the government's revitalization program, which is
aimed at supporting local manufacturers and helping curb the
rampant smuggling of overseas products.
But the program has so far failed to work as no investors are
interested in financing it.
"I think not much will change in the future because the
government does not care about this problem," Widjanarko said.
He added the government's plan to introduce a new labor policy
would further undermine Indonesia's toy export performance, as it
would increase the financial burden on local firms and push up
the price of toy products.