Pressure mounts on govt to review textile quota

Adianto P. Simamora, The Jakarta Post, Jakarta

Pressure is mounting on the government to review the management of textile export quotas by the Ministry of Industry and Trade after the Indonesian Textile Association (API) called over the weekend for an independent audit of the management.

Natsir Mansyur, an executive of the association said the audit was necessary to see if the ministry had managed the textile quota fairly over the past years.

"The government could name an independent auditor, such as (U.S. firm) PricewaterhouseCoopers and we are ready to finance it," Natsir told The Jakarta Post.

The association has long criticized the government's lack of transparency in distributing export quotas for textile producers, causing grievances among them.

The trading of export quotas by brokers has been rampant in the past, forcing many textile producers to pay a hefty price for the quota so that they can export their products to the so-called "quota countries", such as the U.S. market, which is one of the country's largest textile markets.

"This (transparency) is the main problems. We can't trace the total quotas allocated by the government and the holders of the quotas," Natsir said.

Several lawmakers earlier urged Minister of Industry and Trade Rini M. Soewandi to revise the existing allocation system to boost transparency in allocating export quotas.

Azwir Dainy Tara, a lawmaker at the House of Representatives' Commission V overseeing trade and industry said that the Ministerial Decree No. 311/MPP/10/2001 on Textile Quota issued by Rini must be changed.

The decree allows textile producers to maintain the same permanent quota in the following year provided they are able to fulfill the quota given in the current year.

Textile quota distribution has often caused controversies over the past several years. Last week, controversy over the issue broke out again following the sharp increase in the price of quotas of trousers and jeans products exported to the U.S.

The country's textile producers were surprised to learn that as of May, 70 percent of this year's annual export quotas of trouser and jeans -- totaling about 192,000,000 million pairs of trousers and jeans -- had been filled, while there has been no indications of local companies significantly boosting their output. Normally by May, only 23 percent of the quota for the products is filled.

There are still quotas for the products on the local market, but the price was too expensive at around US$30 per dozen of export items, compared to the normal price of between $5 and $8 per dozen of export items.

The U.S., Europe and Japan account for about 45 percent of Indonesia's textile exports, while the so called "non-quota countries", that is the countries in the Middle East, Latin America and Africa, take the remaining 55 percent.

Data from the Ministry of Industry and Trade shows that the export of textiles and textile products reached $7.6 billion last year compared to $8.2 billion in 2000.