PT Sandang to assist in textile industry crisis

JAKARTA (JP): Minister of Industry Tunky Ariwibowo says state- owned PT sandang I and PT Sandang II will assist small and medium-scale textile companies to cope with the shortages of textile materials.

"The two companies will supply textile materials to small and medium-scale companies under soft payment terms," Tunky told journalists after a meeting with President Soeharto yesterday.

He said he would soon meet with Finance Minister Mar'ie Muhammad to discuss soft loan financing for the small and medium- sized firms.

Tunky met with the President to discuss the problems faced by Indonesia's smaller textile companies, especially in relation to the procurement of raw materials.

The meeting was prompted by recent complaints from small textile firms in West and Central Java that their businesses were threatened with bankruptcy as a result of sharp rises in the prices of raw materials.

Tunky did not disclose the amount of money to be extended in soft loans, saying only that he would discuss the issue with the finance minister.

He added, however, that the planned assistance from the state- owned companies would provide only a short term solution to the difficulties faced by small and medium-scale textile companies.

The smaller firms would have to restructure their operations if they were to survive in the medium to long term, he said.

Programs

Tunky said the government would study the technology used by those companies and would then decide what kind of programs would be needed in order to improve their efficiency and productivity.

He admitted that the problems currently encountered by small and medium-scale firms were a result of the increases in the prices of textile materials such as cotton fiber, rayon and polyester.

The President, according to Tunky, suggested that Indonesia secure textile materials by increasing rayon production or by developing cotton estates in such cotton producing countries as Kazakhstan and Uzbekistan in joint ventures with local companies.

Indonesia currently depends on imports for almost 95 percent of its cotton fiber needs.

The President also suggested that businessmen develop timber estates to produce dissolving pulp, the main material used in the production of rayon fiber.

Indonesia has three rayon fiber producers, about 10 rayon yarn manufacturers and two purified terepthalic acid producers.

According to Tunky, Indonesia's textile exports reached US$1.3 billion in the first quarter.(04)