Indonesian textile industry will face two obstacles

The director of the Industry Ministry`s Textiles and Miscellaneous Industries, Ramon Bangun, said textiles and their product variants (TPT) will face two obstacles in 2013 that will hamper the development of the industry.

"One of the obstacles is an increase in electricity prices by 15 percent. Another obstacle is the Financial Regulation No. 253/2011, which looks into the repayment of import tariffs," said Ramon on Wednesday.

According to him, the spinning mill industry consumes a lot of electricity.

He said high electricity prices make the textile industry unattractive, reducing the export value of textiles.

"Last year, the growth of the TPT industry had reduced by 6 percent as compared to 2011. This year, we predict that the growth will be lower than 2012," he said.

Ernovian G. Ismy, Secretary General of the Indonesian Textile Association (API), said an increase in electricity prices in 2013 will result in a decrease in the production of textiles and their product variants.

He is worried that many companies will reduce the number of workers in order to cut operational costs.

"An increase in electricity prices will result in lower productivity too," he said.

Ernovian said there is a possibility that as a cost-cutting measure, 10,000 employees will be dismissed.

"The producers cannot increase the price of their goods because it will decrease the competitiveness of local products. Without increasing the price, we have already reduced the competitiveness of our products," he added.