Textile firms struggle to survive in West Java

Yuli Tri Suwarni, The Jakarta Post/Bandung

After the government raised fuel prices early this month, Bandung textile businessman Satya Natapura could only pray for a miracle for his business to survive.

Previously, his business suffered a 35 percent increase in production costs following the government's decision to raise fuel prices in March as well as power rates and road tolls.

This time around, with fuel prices increased by 126.6 percent on average, production costs have jumped by 15 percent while production is lower due to consumers' low buying power.

"I used to produce 1,000 kodi (a score of wholesale purchase of 20 pieces) of sarongs per month but ahead of the Idul Fitri celebration, demand decreased to only 600 kodi a month," Satya told The Jakarta Post on Friday.

He added that, despite the increased production costs, he could not raise prices as he was afraid of losing customers. The price of sarongs has remained at Rp 300,000 (US$30) a kodi.

Only 140 textile companies, employing around 27,000 workers in total, have survived in the Majalaya textile industry zone. The zone houses small- to medium-scale textile factories with less than 1,000 workers each. Business started to drop off in 2000, when cheap textile imports from China increased.

Now, within a two-month period, the number of textile businesses in Majalaya has dropped to 53 -- from the previous 193 companies, which employed 35,000 workers, recorded in August this year.

"After the Idul Fitri celebration, many more businesses could be shut down. Many of them are struggling now just to make up for what they lost ahead of Idul Fitri. Besides, there's the fear that if they fired workers ahead of the holiday there would be protests -- so that's why they haven't," he said.

The increase in production costs was mostly triggered by the 25 percent increase in the price of raw materials -- from the previous Rp 2.8 million per bale (of 181 kg) to Rp 3.5 million per bale -- and the increase in transportation costs by 30 percent.

"Even the price of dyes has increased to Rp 7,000, from the previous Rp 6,000," Satya said.

He said it would be hard for the Bandung textile business to survive, especially with the plan to raise the minimum wage for workers next year, which is predicted to increase from Rp 601,000 per month to Rp 721,000 per month.

Around 47 percent of the 2,600 large-scale textile industries catering mostly to the local market are located in West Java, contributing about 20 percent to the country's total export.

Textiles are West Java's major non oil and gas export, contributing more that US$1.5 billion, or almost 50 percent of the total income generated from non oil and gas exports.

Deputy chairman of the Indonesian Textile Association in West Java Ade Sudrajat said the remaining 1,200 textile businesses in the province would be fighting to stay afloat in the coming months.

"According to a report I received, consumers' purchasing power is already down by almost 50 percent," Ade said.

He said that, in the last six months, 40 textile factories in the association -- the members of which are mostly large-scale textile factories -- had closed down or relocated to other cities and countries to improve their products' competitiveness.

The association also observed that many factories had downsized their workforces to reduce production costs.

He predicted that by December this year, 10,000 workers in the textile industry would lose their jobs.