A task force headed by the Minister of Industry and Trade, Rini Soewandi, and the Ministry’s Directorate General of International Trade, Sudar SA, in cooperation with top officials from state-owned banks and the textile association, which will work under the supervision of the Coordinating Minister of Economic Affairs, Dorodjatun Kuntjoro-Jakti, has been formed with the purpose of addressing Indonesia’s beleaguered textile industry. According to the chairman of the Indonesian Textile Association for Greater Jakarta, Benny Benyamin, the textile industry has been greatly burdened by many factors, such as: obscure quota allocations by the government; loss of competitive edge against countries such as China and Vietnam; as well as a Decree (Ministerial Decree No. 155/2001) to put cotton off the list of strategic commodities, thereby forcing the industry to pay a 10% import duty each time they buy their cotton from abroad. That last impediment is significant, since 98% of the total amount of cotton used in the textile industry is imported. Furthermore, textile factories with their own power generators now have to pay a tax, and since electricity supply from PLN is prone to mishaps, most factories tend to have their own generators so as to protect productivity. As if adding insult to injury, these factories are also obliged to pay a tax for the provision of power to the main road outside their facilities (PPJU). It will be acceptable to argue that perhaps the Indonesian textile industry is less competitive than other Asian contenders precisely because of these unsupportive government policies.

            Indonesia’s total textile exports have been on the decline ever since the implementation of the cotton import duty: in 2000 exports were valued at US$ 8.2 trillion; in 2001 they fell to US$ 7.2 trillion, then US$ 6.8 trillion in 2002. The year 2003 saw a slight increase to exports to US$ 7.03, however. The task force is determined to return the industry’s competitiveness by 2005, and to achieve a target of 5% growth in textile exports this year: to this end, the task force will have to identify problems as well as design and implement policies before the establishment of the new government. [aws]