Government Increases Soft-Loan Assistance to Help Textile Makers

The government will increase financial assistance for the restructuring of the country's textile industry by 56.8 percent to Rp 400 billion (US$43 million) this year, up from Rp 255 billion in 2007.
Ansari Bukhari, director general for metal, machinery, textile and miscellaneous industries at the Industry Ministry said Wednesday this year’s assistance would be executed in parts.

Rp 388 billion would be allocated for large-scale textile companies under one scheme, and Rp 50 billion would to help SMEs under a second; the remaining Rp 12 billion was for promotion activities and surveys.
The assistance comes in the form of soft loans for the country’s textile makers, most of whom are having a hard time expanding production capacity due to aging machinery and equipment.

Ansari acknowledged that last year the government failed to disburse the entire amount allocated for industry restructuring, with only Rp 152,8 billion being disbursed, or 60 percent of last year’s allocation. Of that amount, Rp 128,3 billion went to 78 large-scale companies and Rp 24,5 billion to 12 SMEs.
“Many small enterprises do not have proper financial reports as are required to apply for the loans.

“Another problem was that most of them were only willing to import second-hand machinery, while the loans were intended for companies restructuring their plants with new machinery,” he said.
Textile director at the ministry, Arryanto Sagala, said the ministry would learn from last year’s failure and heed feed back from textile firms in seeing through this year’s restructuring assistance.

“For large scale companies, for example, we will allow them to apply for the assistance by showing documents of credits from various sources including from their own budget,” he said.
He said the ministry had invited participation from 800 companies late last year and expected to receive immediate responses because registration would start in February.

Executive secretary of the association Ernovian G. Ismy said the country’s textile exports were expected to grow by 10 percent this year in line with improvements in production facilities.

The association reported the exports of textile-related products grew by only 6.4 percent to US$10.06 billion from US$ 9.4 billion, while the growth target last year was 10 percent.
President of the Indonesian Textile Association (API) Benny Soetrisno said Indonesia was strong in the garment sector as its exports increased by 13.2 percent to $5.97 billion last year. By comparison, exports of fabrics declined by 2 percent to $1.44 billion.

“We hope garment companies will invest in the production of fabrics because overseas buyers are now demanding quick delivery of products.”

 

Source: The Jakarta Post
Date: January 04, 2008