Synthetic fiber manufacturers ask for help

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)