Textile imports are threatening local industry: API

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.