Textile imports are threatening local industry: API

Adianto P. Simamora, The Jakarta Post, Jakarta

Tough times lie ahead for the country's ailing textile firms as cheaper smuggled textiles have started to flood the local market, according to the Indonesian Textile Association (API).

API chairman Lili Asdjudiredja warned that unless the government takes immediate measures to curb the rampant smuggling, more textile companies would go bankrupt this year.

"I just received a report yesterday that two textile firms in Bandung, West Java, will stop operations this week and lay off some 400 workers," he told The Jakarta Post on Wednesday.

He explained that the inflow of smuggled products has added to the misery of local textile firms, which have been struggling to cope with rising manufacturing costs and labor conflicts.

He said that some 98 textile firms in West Java had stopped operation since 2000 as they could no longer compete in the market.

"The present situation is very difficult for us as the volume of smuggled textiles continue to increase," he said.

Lili said that the existing customs regulations were too weak to curb the rampant smuggling of textiles.

Minister of Industry and Trade Rini M. Soewandi earlier also warned that smuggling was damaging the local industry and was likely to force many manufacturing companies, including textile firms, to close their operations and lay off their workers.

The country's textile producers had also repeatedly called on the government to take action to help boost competitiveness of Indonesian textiles and garments.

"We are not competitive in the local and overseas markets as our products are more expensive," Lili said.

Lili said that limited government support, high production costs as well as the poor condition of machinery made the local products less competitive.

Meanwhile, industry analyst Kustarjono Prodjolalito shared Lili's opinion, saying that cheaper imported garments had flooded the local markets in the last two years.

"I think that some 50 percent of garments sold in the local market now are imported products with lower prices," he told The Post.

Kustarjono said that local consumers were also more interested in buying imported garments because of their price and quality.

"I don't know whether these imported products are smuggled or not. But the fact is that buyers can now find them (imported products) easily in the market," he said.

Lili predicted that the country's export revenue from textiles and textile products would decrease by 30 percent this year from US$7.6 billion last year as local products could not compete in the export markets.

Indonesia booked a record $8.2 billion in the export of textiles and textile products in 2000, but exports slipped to $7.6 billion the following year.