Silversmiths face unemployment

Slamet Susanto, The Jakarta Post, Yogyakarta

In the past few months, 455 silver handicraft manufacturers in Yogyakarta, or 70 percent of all such firms in the historic city, have closed down due to the rising price of raw silver.

Slow business has also forced 2,275 silversmiths, mostly of small- and medium-sized companies, to lose their jobs.

Most of the craftsmen have drifted to any available jobs to make ends meet, including working as pedicab drivers and construction workers.

Deputy chairman of the Yogyakarta Silver Handicraft Firms Association Sutojo complained on Friday that the price of raw silver had been on the since the government had imposed a 10 percent value-added tax on the material in August 2002.

The tax has increased the price of raw silver to US$270 per kilogram. Before the tax was imposed, the price of raw silver was US$170 to US$180 per kilogram.

The rising price of raw silver had subsequently forced silver handicraft firms to raise prices, and thus lose competitiveness in both the international and domestic markets.

"Many international buyers stopped buying our products due to the rising price of silver handicraft products," Sutojo said.

As a consequence, the silver handicraft business gradually declined and left firms in Yogyakarta -- the silver handicraft center of Indonesia -- with no other option but to close shop. Other firms struggled to survive by reducing production volume and other means in order to minimize losses.

Sutojo doubted that the industry could survive, unless the government made a quick decision to scrap the value-added tax.

He demanded that the government take the measure so silver handicraft firms could buy raw silver at cheaper prices and thus enable them to slash the price of their products.

"If this happens, we can reduce the price of our products and regain a competitive edge in the international and domestic markets," he said.

Ismunandar, a public relations officer at HS Silver, acknowledged that the imposition of value-added tax on raw silver had incurred losses on the company. He said the company normally exported 80 to 100 kilograms of silver handicraft products a month, but had exported only 25 kilograms of products a month since the tax was levied.