Textile exports need push
JAKARTA (JP): President Soeharto Saturday instructed government institutions and the private sector to close ranks and take measures to improve Indonesia's competitive edge in textiles and textile products on the world market.
"The government will continue introducing deregulatory measures and will simplify procedures...while textile producers should improve efficiency," he said at the opening of the seventh congress of the Indonesian Textile Association at the State Palace here.
He warned that next year's implementation of the new General Agreement on Tariffs and Trade (GATT) and gradual trade liberalization in the Asia-Pacific region will sharpen competition while offering new opportunities.
New producers have emerged among developing countries, while industrialized countries are making their textile products more competitive, thereby creating fiercer competition on the world market, Soeharto said.
"We, therefore, have no other alternative but to work as hard as possible to make our products highly competitive," he said.
If Indonesia's textile industry has an edge, its economy will grow faster. Otherwise, the country will face serious problems, he added.
Indonesia, together with the five other members of the Association of Southeast Asian Nations (ASEAN), has been committed to liberalizing its trade by 2003. The Asia Pacific Economic Cooperation (APEC) forum, of which Indonesia is a member, also decided in the middle of this month to liberalize trade among its 18 members by 2010 for its developed members and by 2020 for its developing members.
The president suggested that textile producers build up their competitive advantage by working more profoundly with the government, restructuring their industrial facilities and avoiding unhealthy competition among themselves.
Direction
He promised that the government would give clear direction on its policies and would continue deregulating and removing bureaucratic hurdles.
Soeharto admitted that textile and textile-related products have contributed a large portion to the country's exports since 1989, nearly 16 percent.
According to the Central Bureau of Statistics, textile exports, which contributed over US$6 billion to the country's total exports in 1993, have grown by an annual average of 34.4 percent annually since 1989, as compared to the average growth of 20.5 percent in total non-oil exports.
However, the pace of textile export growth slowed down during the first semester of this year, when textile exports declined by 8.5 percent to $3.3 billion from the same period of last year.
In a hearing with Commission VI of the House of Representatives last week, textile producers complained that their products have lost their competitive edge on international markets due to their high production costs.
Factors contributing to the high costs include rises in electricity billing rates, high interest rates, increasing labor wages as well as hikes in the prices of raw materials.
Handoko Tjokrosaputro, of the textile association, told journalists Saturday that long procedures for the withdrawing of value added tax (VAT) have also affected the production costs.
The government has promised to reimburse the VAT to exporters within one month. However, according to Syafioen of PT Great River Industries, the time for reimbursement very often exceeds one month, and a number of exporters even have to wait for a year or two.
Speaking at the two-day congress Saturday, Minister of Trade Satrio B. Joedono promised that the government will simplify the procedure of the tax reimbursement. (rid)