Orders for textile products down by half

JAKARTA (JP): Local textile companies said yesterday export orders for textile and textile-related products had dropped by 50 percent due to the country's political uncertainty.

One of the executive heads of the Indonesian Textile Association, Lili Asdjudiredja, said most of the orders for September and October, for delivery in January next year, had been canceled.

"Even recently, some of the orders for May and June, which would be shipped in September, have been canceled."

He did not disclose the value of the canceled orders, but said it was a huge amount.

Many of those which canceled their orders were European and American firms, he added.

Lili said international buyers were worried that the local exporters would not be able to meet the time of delivery.

They were afraid shipments would not be on schedule or that the delivery would be halted due to further social unrest.

They were also concerns their goods might be looted during transportation if riots reoccurred.

"These people (buyers) saw riots here on TV, and they are afraid of arson and more riots."

Jakarta was hit by four days of widespread looting and arson starting May 14, which resulted in at least Rp 2.5 trillion in property damage and several days of crippled economic activities.

Distribution

Lili said the textile industry did not suffer much destruction of its production facilities, but most losses were incurred from the halted distribution prompted by fears of mob violence.

Last year, exports of textile and textile products dropped by 19.64 percent to US$5.27 billion, after enjoying a 13.87 percent rise to $4.64 billion in the first eight months of the year.

Lili said the association considered current high interest rates -- part of the government's tight monetary measures -- a burden to the exporters.

For example, an average 58 percent interest rates of Bank Indonesia's promissory notes and 70 percent lending rates bit into the exporters' revenues by 15 percent, he said.

A rise in fuel and power tariffs only contributed 3 percent to 4 percent of the revenues, he said, referring to the government's move early this month to raise the tariffs as part of the economic reform.

Lili said the new trade and industry minister Rahardi Ramelan had vowed to take inventory of all the problems involving exports, including banking, seaports and transportation. (das)