War jitters already hurting RI export: Businessmen

War jitters already hurting RI export: Businessmen

Rendi A. Witular, The Jakarta Post, Jakarta

Tension evolving in the run-up to imminent war in the Gulf has
already dealt a blow to the country's exports, causing fear that
Indonesia will not be able to reach its export target growth this
year, businessmen said on Friday.

Many buyers in Europe, Africa and the Middle East have stopped
orders for the country's prime manufacturing commodities such as
textiles and footwear.

Deputy chairman of the Indonesian Textile Association (API)
Lili Asdjudiredja told The Jakarta Post that textile orders,
which usually reach a peak in the first quarter of the year, had
significantly plunged due to war jitters.

"The looming war is devastating our exports as we have hardly
received any orders, especially from Europe, Africa, Asia minor
and the Middle East," said Lili on Friday.

Lili forecast that if war broke out and did not quickly end,
the country's textile exports would likely plunge by roughly 50
percent from last year's exports of US$7.2 billion. In 2001,
exports reached $7.6 billion.

Lili explained that a 50 percent drop was possible as
Indonesia's textile transit hub for the European, African and
Middle Eastern markets was located in Dubai, United Arab
Emirates, which, given its proximity to Iraq, would feel the
impact of an attack on Iraq. It is located about 750 kilometers
from Iraq.

Fifty-one percent of Indonesia's textile exports are sold to
the European, African and Middle Eastern markets.

Dubai has for decades been a major center for textile trading.

Lili said that it would be difficult for textile traders to
relocate their hub from Dubai as no other ports provided the same
facilities, especially to accommodate textile traders bound for
the European, African and Mideast markets.

The country's export performance last year was better than
expected, with the Central Statistics Bureau reporting last week
that the value of exports rose by 1.21 percent to $57 billion
last year. This year, the government targets export growth at 5
percent.

Indonesian Footwear Association (Aprisindo) secretary-general
Djimanto shared Lili's concerns, saying the footwear industry was
also receiving fewer orders due to the war jitters.

"If war breaks out, demands from Europe, Africa and the Middle
East will probably dip as ships that carry shoes have to pass
through the risky Suez Canal to reach the markets," said
Djimanto.

The Suez Canal could be considered a high-risk route for ships
if the U.S. launches a military strike on Iraq. The canal is
located around 650 kilometers from Iraq.

Some 40 percent of Indonesia's footwear exports go to the U.S.
market and another 33 percent to Europe. The remainder goes to
African, Middle Eastern and South American countries.

Djimanto added that the global prices of shoes would surely
increase significantly as buyers would have to pay extra shipping
costs in the form of a war-risk surcharge.

Despite businessmen's worries, the government says it has not
made a contingency plan to help contain the impact of war on the
country's exports.

Minister of Industry and Trade Rini MS Soewandi said on
Thursday that the government had yet to make plans as war had not
yet broken out.

"We haven't set up any contingency plans, what for? War is not
definite," Rini said on Thursday.