Small textile companies to suffer losses

JAKARTA (JP): Hundreds of smaller textile companies are likely to go out of business as the prices of raw materials continue to rise and domestic demand for textile products decreases, a legislator said yesterday.

"The government has to act rapidly to solve the problem before it grows into a crisis like those which struck the cement and newsprint industries," said Farid Akhwan, a member of the Energy and Manufacturing Commission of the House of Representatives, as quoted by Antara.

For the past few years, Indonesia has been suffering from annual cement crises due to an imbalance between supply and demand. Now the country is facing a newsprint emergency, triggered by the global newsprint crisis.

Farid said most of the troubled small textile companies were located in Pekalongan and Surakarta in Central Java, Gresik in East Java and in Majalaya, Tasikmalaya and Ciamis in West Java.

He said that the prices of raw materials, including rayon, polyester and cotton, had increased by 70 percent since the end of last year. Cotton of the 30/s-TR type, for example, currently sells for about Rp 1.4 million (US$630) per roll, as compared with Rp 790,000 last December.

Farid suggested that the government remove tariffs on raw materials for textiles. The government currently imposes duties of between five percent and 10 percent on imports of polyester and rayon fiber. (rid)