Textile body blasts plans on export quota monopoly
Textile body blasts plans on export quota monopoly
JAKARTA (JP): The Federation of Indonesian Textile Industries criticized the plan of several private businesses to monopolize the distribution of export quotas and the importation of cotton.
Federation Chairman Husein Aminuddin, in a statement made available to The Jakarta Post last week, said a monopoly would harm textile exports and the textile industry.
"This plan... aims at monopolizing the export of textiles and textile products and the import of raw material," he stated.
Aminuddin said the people behind the plan intend to submit a request to the Ministry of Trade and Industry for the right to bundle the three monopolies in to a single package.
The privilege of distributing export quotas was previously held by the Ministry of Trade, before the ministry was integrated last month with the Ministry of Industry.
Aminuddin said that ever since export quotas were issued by industrialized importer countries -- which include the United States, members of the European Union, Canada and Norway -- their distribution among Indonesian companies has never run smoothly.
Quotas, he said, have always been an object of contention. "Textile producers are not the only ones fighting for the quotas. Non-textile companies and even (social) foundations fight for them," he said.
Export quotas, Aminuddin said, have become traded goods and are now a lucrative source of income.
"People who can get a share of the quota, but are unable to export the (textile) commodity, sell the quota to producers who need it," he said.
The distribution of export quotas, he said, is not carried out transparently and the criteria for the allocation has never been clear.
He said that as long as export quotas continue to be treated as goods, their distribution and, in turn, Indonesia's textile exports, will never bring in maximum benefits.
The government announced in November that Indonesia's textile exports and textile products -- the country's largest foreign exchange earner among non-oil products -- only increased 1.4 percent to $3.3 billion during the first seven months of 1995 over the same period in 1994.
Exports in 1994 decreased by 8.1 percent, to US$5.6 billion, from 1993.
Aminuddin said that appointing a single consortium to manage the quotas would make things worse, because conflicts of interest would increase. "Prices of quotas would become more expensive because they would be monopolized by the consortium," he reasoned.
Consequently, he said, the price of Indonesian textile and textile products would not be able to withstand international competition.
Aminuddin predicted that the unfavorable 1995 export market would continue this year. Such a situation, he said, would not only be felt by Indonesia but also by other exporters like China, Vietnam, Sri Lanka and Pakistan.
"The United States, the world's biggest textile importer, had a dull market in 1995, as consumers reduced their buying. There seems to be no sign of recovery yet," he said.
Aminuddin said that plans to monopolize the importation of cotton fiber would also upset textile production in Indonesia.
"Cotton prices are determined by futures trading on the New York market, thus manufacturers make imports according to their need and according to the daily fluctuating prices on the market," Aminuddin said.
Indonesian textile factories presently import almost all the cotton they need, a total of 2.3 million bales a year. From this amount, 45 percent comes from the United States. "If this is monopolized, the profits of the monopoly holder will be huge," he said.
Aminuddin, who is also the chairman of the Association of Indonesian Spinners (Sekbertal), said that between 1985 and 1986, the association succeeded in stopping PT Cerat Bina Tekstil Indonesia from monopolizing cotton imports.
"Sekbertal, which is made up of spinning factories and cotton merchandisers, will continue to do so," he said. (pwn)