RI textile exports set to increase

The Jakarta Post, Jakarta

The Indonesian Textile Association (API) said on Wednesday that export revenue from textiles this year would increase to US$8 billion from $7.6 billion last year.

Meanwhile, the Indonesian Footwear Association (Aprisindo) said the country's shoe exports would drop slightly by 6.25 percent to $1.5 billion this year, as some overseas buyers had begun turning their orders to other countries such as China and Vietnam, which offer lower prices.

API executive director Indra Ibrahim attributed the projected rise in textile exports to "aggressive marketing efforts" from producers, better government policy and the recovery of the U.S economy in the second half of this year. He did not elaborate.

U.S. is Indonesia's largest export destination.

"With all these conditions, I'm quite optimistic the country's textile exports will recover this year," he was quoted by Antara as saying.

API said that the domestic textile industry had been hit by various uncertainties last year, including the world economic slowdown.

The association said riots and labor strikes at home had triggered foreign buyers to delay their orders, while several buyers shifted their orders to other countries.

Government policies had also been seen as discouraging, particularly on the government decision to raise fuel prices, electricity rates and the minimum wage.

API said that many textile companies had also not been able to renew their old machinery due the lack of working capital.

At the same time, demand from buyers has been sluggish following the U.S. economic slowdown, which was worsened by the Sept. 11 terrorist attacks on the U.S.

The $7.6 billion textile exports in 2001 was a drop from $8.2 billion in 2000.

Separately, Aprisindo chairman Harijanto said overseas shoe buyers, particularly from the U.S., had begun shifting their orders to China and Vietnam due to the non-conducive business situation at home.

He added the entry of China to the World Trade Organization (WTO) had boosted China's competitiveness, but caused Indonesian products to become less competitive.

"Our products are now 12 percent more expensive than those from China and 20 percent higher in price than those from Vietnam," he said at a hearing session with the House of Representatives Commission V on industry and trade affairs.

Hariyanto said that the shoe industry had also been badly affected by the increase in fuel prices, electricity rates and minimum wage.

"If the government doesn't issue favorable polices for the sector, I'm certain that exports will decline and many companies will have to shut their factories down in the next three to four years."

He feared that many foreign investors in the sector would soon relocate their factories to China and Vietnam.

He also said that the government should accelerate the restructuring of debts owed by shoe companies to allow them to seek bank loans for working capital.

The country's shoe exports reached $1.6 billion last year and $2 billion in 2000.