Textile makers seek help as quota set to end

Adianto P. Simamora, The Jakarta Post, Jakarta

The country's textile and garment industry will still be able to secure its overseas markets when the current quota system set by the U.S. and Europe will be eliminated by the end of 2004, the Indonesian Textile Association (API) said.

API, however, urged the government to help the industry boost its competitiveness particularly in competing with producers from China and India.

"The government needs to take immediately action," API's head of international relations and foreign trade Sunjoto Tanudjaja said in a press statement issued late last week.

Sunjoto did not provide details on what kind of policies the government were recommended to formulate.

Industry players, however, have long complained about the massive inflow of cheaper imported products from China and India which is threatening the existence of local textile and garment manufacturers. Chinese textilemakers receive a subsidy facility from their government.

The unfavorable business climate at home, rising production costs, lack of trade financing facility, and illegal fees have also created difficulties for local manufacturers. Bank loans are needed to finance the purchase of new machinery.

Textile producers from developing countries have been able to make exports despite rising competition because of the quota system introduced by the U.S., Europe and Canada.

But at last week's meeting of trade ministers in Brussels, it was agreed that the quota system would be eliminated by the end of 2004 as required under the World Trade Organization ruling.

Once this happens, Indonesia's textile and garment producers must compete with manufacturers from other countries in entering the U.S. and other markets.

Sunjoto, who is also the president of garmentmaker PT Great River International, was optimistic that local producers could still compete with those from Vietnam or Bangladesh, but acknowledged that competition with China would be tough.

Textiles are one of Indonesia's main non-oil and gas export products.

Indonesia booked a record $8.2 billion in textile exports in 2000, but slipped to $7.6 billion in 2001. Textile exports were only $6.8 billion in 2002.

Sunjoto said that local textilemakers must start seeking markets other than the U.S. to help cushion the impact of the quota elimination.