Indonesia : $505mn required for restructuring textile industry

An estimated $505 million would be required to restructure

the national textile and textile articles industry''''s

production facilities, according to the Ministry of

Industry and Trade.

Tha above was revealed in a survey carried out by

state-owned surveyor PT Sucofindo on the industry on

Monday.

Nearly 20 percent of 4,109 companies surveyed from 2001

until July 2004 required rehabilitation package or

replacement of their machinery to continue operations or

stay competitive, Ministry Director of Textiles and

Textile Product Industry Luky Hartini informed at a media

conference.

The balance 80 percent claimed ''''no requirement'''' of such a

restructuring program as their machinery was relatively

new -- less than 10 years old.

The survey was carried out in face of severe competition

from China and other poorer nations.

Luky stated that restructuring program would focus on the

finishing, weaving and spinning subindustries, whose

products (fabric and yarn) were in the highest

international demand in comparison with other Indonesian

textile products.

Yarn and fabric accounted for 43 percent and 23 percent of

Indonesia''''s export volume from 2001 and 2003.

The ministry said earlier that it had met with Bank

Indonesia (BI) last week and requested the central bank

review its policy of discouraging private banks from

funding the textile and apparel products industry due to a

large number of large bad loans in the sector.

The Sucofindo survey showed that of the 774 textile

manufacturers that need restructuring, 703 were garment

makers, which needed a combined $206 million and 36 were

integrated textile producers needing $247 million. The

remaining 35 companies were associated with spinning,

weaving, knitting, printing, dyeing and finishing.

Luky admitted the survey could not comprehensively

illustrate the complete situation with regard to the

nation''''s textiles and textile products industry, as some

10,000 companies were registered in the ministry, while

only 4,109 of them participated in the survey. Most of the

participants (88.6 percent) were garment makers.

Furthermore, she said that Sucofindo had sent

questionnaires to more than 6,000 companies, but only

4,109 responded. The other companies might have been

closed, changed business or fictitious.

"But we will exclude them (the nonresponding companies)

from our list of future programs," she said.

As a follow-up on the survey, the ministry had asked

Sucofindo to produce a more comprehensive map of the

national textile industry, Luky said.

Utilization of production plant capacity at the industry

dropped significantly to 65.1 percent last year from 84

percent in 1999.

The industry, which absorbs 1.2 million workers, was the

second-largest contributor of foreign exchange earnings

among non oil and gas industries last year, after the

electronics industry, with an export value of $7.03

billion or 16.22 percent of total non-oil and gas exports

last year.