Textile firms say export swap facility unclear, confusing

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)