Textile companies cut output as orders slump

SEMARANG (JP): Many textile companies have reduced production due to a reduction in orders from their main foreign buyers, the Indonesian Textile Association has said.

The association's senior executive, Benny Soetrisno, said on Saturday that the textile industry had no choice but to cut production in the wake of declining orders from the United States, Japan and European countries.

"Sluggish demand from main textile buyers leaves us no alternative but to lower production in order to survive the difficult time," Benny said at a seminar on investment prospects in Indonesia.

Benny said the country's textile industry was very sensitive to the impact of the global economy slowdown as most of the country's textile products were for export.

Association chairman Lili Asdjudiredja warned earlier that the textile industry might not be able to meet its export target of $7.8 billion this year.

"We estimate exports this year will be between 20 percent and 30 percent below our target," Lili said.

Benny said that aside from the global economic downturn, growing political uncertainty had also caused uncertainty in the textile industry.

He revealed that several medium-scale textile companies in West Java had relocated their plants to other countries, including Vietnam, in search of a relatively stable political climate.

Textile producers have also complained about the country's high cost of production. Not long after the government increased power prices by 80 percent and basic wages last year, it raised fuel prices for industry by 50 percent. It plans to also hike fuel prices by 30 percent starting July 15. (har/03)