Synthetic fiber manufacturers ask for help
JAKARTA (JP): Indonesian synthetic fiber manufacturers have asked for governmental support in boosting the competitiveness of their products on both the domestic and international markets.
Acting chairman of the association of Indonesian synthetic fiber manufacturers, Sri Prakash Lohia, made the request during a hearing with the House of Representatives' Manufacturing, Mines and Energy Commission.
Prakash said that a number of constraints are impeding the competitiveness of the local fiber industry, including the high interests rates charged by domestic banks, slow customs services and import tariffs on auxiliary materials, such as spin oil for fibers and other grind stone, each of which are subject to an import duty of 10 percent.
"We follow international pricing of synthetic fibers. Therefore, any inefficiency in our production processes can hamper our competitive edge... We often sacrifice our profit margin to maintain our competitiveness," Prakash said.
The domestic synthetic fiber industry depends very much on imported raw and auxiliary materials, which account for 60 percent of production costs, he said.
He added that, currently, more than 50 percent of the raw materials used in Indonesian fiber production, mainly purified therephthalic acid (PTA) and ethylene glycol, are imported, mostly from Middle Eastern countries.
Moreover, the prices of PTA and ethylene glycol have been increasing steadily since last year. The price of PTA was US$1,200 per metric ton this month, as compared with $680 early last year, he said. Ethylene glycol is selling for $780 per metric ton this month, up from $400 early last year.
By next year, when PT Bakrie Kasei has completed its expansion project in Merak, West Java, Indonesia will probably cease to depend on imported PTA, Prakesh said. Bakrie Kasei expects to double its production capacity to some 500,000 tons of PTA per annum.
Mitsui of Japan is also building a PTA plant in Merak, which is expected to start commercial production in 1997, he said.
Prakash said another problem faced by domestic synthetic fiber manufacturers are dumping practices on the part of producers in other countries, mainly Taiwan and South Korea -- the two largest manufacturers of synthetic fiber in the world.
Protection
"Therefore, we ask the government for protection whenever foreign producers dump their prices here," Prakash said. "The normal price of polyester staple fiber, for instance, should currently stand at $1.78 per kilogram. However, some foreign producers offer domestic costumers (the price of) $1.50 a kilo."
Currently, the total annual production capacity of Indonesia's synthetic fiber plants is approximately 700,000 tons, far behind Taiwan' 2.5 million tons, Korea's 1.8 million tons and Japan's 1.3 million tons.
Synthetic fiber, including polyester staple fiber, polyester filament yarn and nylon filament yarn, is used in the production of textiles.
The association projects that total output of polyester staple fiber will increase to 262,300 tons this year, up from 195,900 tons last year. The production of polyester filament yarn is expected to rise to 438,400 tons this year, from 398,500 tons last year, and nylon filament yarn is expected to rise to 27,300 tons, from last year's 26,000 tons.
This year the association expects to export some 50,000 tons of polyester staple fiber, 50,000 tons of polyester filament yarn and 120 tons of nylon filament yarn. (rid)