RI's textile industry may collapse by 2005: Association

RI's textile industry may collapse by 2005: Association

Antara, Jakarta

Indonesia's textile industry may collapse, especially after
the abolishment of the quota system in January 2005, if the
government fails to create a climate in which the industry can
compete in the domestic and overseas markets, an industry
spokesman said.

"If the situation continues to deteriorate, the textile
industry will collapse by 2005. This will especially happen to
export-oriented industries producing the same goods as their
foreign competitors," chairman of the Indonesian Textile
Association (API) Benny Soetrisno said here Wednesday.

Currently, Benny said, the textile industry had to bear an
increasing burden from illegal levies and taxes as well as new
legal levies as a consequence of regional autonomy.

The situation was compounded by an unfavorable business
climate marked by high interest rates, lack of trade financing
facilities, stagnation in capital restructurization, increasing
minimum wages, labor unrest, and the increasing cost of energy
and infrastructure, he said.

"Those factors have affected the competitiveness of export-
oriented industries. An API survey has shown that the business
climate in Indonesia is not as good as in our potential
competitors such as China, Vietnam, and Thailand," Benny said.

As a result, textile exports had been declining significantly
since the economic crisis hit Indonesia in mid 1997.

In 1998, textile exports declined by 0.07 percent to US$7.433
billion from $7.438 billion in 1997.

The exports plunged in 1999 to $2.279 billion but then sharply
increased to $8.377 billion in 2000.

In 2001, the commodity's export dropped by 24.74 percent to
$6.304 billion.

According to Benny, at least 40 textile companies were running
at a financial loss while 76 others were unable to conduct their
activities normally.

"As many as 76 factories have closed down. Some of them
possibly relocated to other countries because of heavy burden
that have to be borne at home," he continued.

The textile industry is facing serious difficulties due to
unfavorable business climate in Indonesia, he said.

Unfortunately, instead of making concrete efforts to improve
the situation, some related institutions were involved in
smuggling, increasing port and transportation fares, and other
activities which could lead to the collapse of domestic industry,
Benny said.