Two state industrial companies may lose over Rp 56 billion

JAKARTA (JP): Two state industrial companies are likely to suffer losses of Rp 56.3 billion (US$25.9 million) this year due to the appreciation of Japanese yen against American dollar and the rescheduling of a number of projects.

In a hearing with Commission VI of the House of Representatives earlier this week, Minister of Industry Tunky Ariwibowo named the two companies, PT Rekayasa Industri and PT Asean Aceh Fertilizer. The latter is a joint venture project under the Association of Southeast Asian Nations (ASEAN) grouping Indonesia, Malaysia, Singapore, Thailand, the Philippines and Brunei.

"Asean Aceh Fertilizer will probably lose some Rp 50.2 billion due to the appreciation of the yen against the U.S. dollar and the rupiah," he said. "Last year, this company suffered even greater losses, which were Rp 61.8 billion," Tunky said.

Rekayasa Industri will likely lose Rp 6.1 billion this year because of the rescheduling of a number of projects which they had been awarded, he said.

Last year, Rekayasa Industri recorded a profit of Rp 1.3 billion.

Twenty six other state industrial companies, overseen by the Ministry of Industry, are projected to generate total profits of Rp 286.5 billion this year.

Last year, 24 companies booked total profits of Rp 418.8 billion, while the other four companies suffered total loses of Rp 122.7 billion.

Export drops

Tunky also explained to the commission, which deals with manufacturing, mining and energy industries, that the country's exports of 10 major industrial products declined by up to 20 percent during the first five months of this year.

The effected products are textiles, leather goods, steel, machinery and automotive vehicles, food and beverages, pulp and paper, ceramics, marbles and glasses, plastics, toys, sports equipment and musical instruments.

Out of the 10 industrial products, textile and textile-related products suffered most with a 20-percent decrease to US$2.1 billion in the January-May period from US$2.6 billion in the corresponding period of last year.

"The decrease in textile exports was heavily influenced by tough competition with countries which have raw materials and lower labor wages, like China, India, Pakistan, Bangladesh and Vietnam," Tunky argued.

Indonesia also faces fierce competition with modern textile exporting countries like the United States, the European Union, Japan, Hong Kong and South Korea.

"We lose in head-to-head competition with developed countries on textile and textile-related products because they have superior delivery time, flexibility, quality and designs as well as payment systems," Tunky noted.

Tunky said he is optimistic that textile exports will achieve an annual target of US$12.7 billion in 1998, however, as the world's textile demand increases by 2.8 percent annually. (rid)