Textile firms struggle to survive in West Java

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.