Textile firms say export swap facility unclear, confusing

JAKARTA (JP): The low interest rate swap facility given to export-oriented companies by Bank Indonesia is unclear and confusing, an industry association representative said yesterday.

Deputy chairman of the Indonesian Textile Association, Benny Soetrisno, said businesses were confused about how the swap facility worked, and government officials had failed to help them understand.

"Apparently banks are not providing the new assistance because they still do not fully understand the facility," Benny, also president of PT APAC Inti Corpora, was quoted by Antara as saying.

Bank Indonesia announced Monday that the swap facilities interest rates would be one percent lower than market interest rates to help export-oriented activities.

BI said the swap facility, which was first introduced late last year, was essential to ensure that exporters could get U.S. dollars to finance their raw materials at exchange rates approved in advance.

But many exporters are unable to enjoy the new facility. Only companies of large groups which have their own banks were able to enjoy the facility, he said.

He said the sector was burdened with high interest rates on rupiah and dollars.

"Interest rates should be lower make our products more competitive, not the other way around," he said.

Antara reported that banking fees for dollar-denominated import procedures and negotiation of export revenues had risen by between 10.5 and 17 percent. Banking fees in the rupiah denomination have also risen steeply.

This had adversely affected the performance of the textile industry, which was supposed to provide most of the country's foreign exchange revenue, he said.

Uncertainty over the rupiah's value has also caused the sector to stagnate.

Many companies have been forced to cut back workers' shifts, he said.

Some have also increased the number of workers' days off from five days a month to 20 days a month, he said.

He said the government could increase bank interest rates and minimum wages if it eliminated the taxes and other levies imposed on the textile industry. (das)