Orders for textile products down by half

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)