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INDONESIA: Govt plans to strengthen ailing textile industry

JAKARTA: The ministers from the government along with business executives has decided to work together on plans to strengthen the ailing textile industry of the country, Minister of Industry Fahmi Idris said here on April 14.

The minister while clarifying said that the plans will include revamping manufacturing facilities, increasing investments in the industry and eradicating smuggling as most of the existing machinery is too old to be operated.

Further textile related machinery is more than two decades old as 64.4 per cent of fiber-making machines or 5,025,287 of the total of 7,803,241.

Restructuring of existing facilities would cost about $ 5 billion for which domestic banks were expected to provide $ 100 million in loans, with another $ 250 million coming from the World Bank's private financing arm, the International Finance Corporation (IFC).

The restructuring is estimated around $ 3.6 billion and another $ 1.4 billion for human resources development as local banks were expected not only to increase their loan commitment but also to lower their lending rates, which are now set at about 18 per cent.

However apart from restructuring and investment, the group also discussed textile smuggling. The government would intensify efforts to prevent smuggling by cutting the number of institutions issuing import permits from 226 to 14.

Recently illegally imported textile products increased by 180 per cent in just one year, from 195,000 tons in 2004 to 548,000 tons in 2005 and the overall value of illegal textile products rose by 35 per cent in the same period, from $ 1.69 billion to $ 2.30 billion.

article courtesy of
www.bharattextile.com

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