As Indonesia Recovers, Industry Looks to Squelch Smuggling
September 2, 2003
BANDUNG, Indonesia – As signs indicate the beginning of an economic recovery in Indonesia, the nation's exporters are likely to face strong competition in the region, especially from the People's Republic of China and Vietnam. Textile exports have declined from $8.2 billion in 2000 to $6.9 billion in 2002 and the domestic manufacturers are facing the onslaught of Chinese's imports as well as smuggling. It is reported that more than 70 containers of textiles were held in the port, which had no supporting documents and the government has temporarily withheld all imports of textiles and things are at stand still as an uneasy calm prevails in the market. Textile importers are now obligated to ensure and assist in cooperating with the authorities to verify imports in the respective countries of origin prior to shipment in order to prevent smuggling.
'This is a good move and we manufacturers in Indonesia will be subjected to false competition if prescribed import taxes are not paid,' said Arifin Ateja, director, and Ateja Tritunggal Corporation, furnishing line manufacturer.
'Every country protects its industry and Indonesia is no exception, which is equally competitive in manufacturing with China. But we would be severely stressed if smuggling continues,' said Joseph Koshan, director PT Sinar Group (Bandung).
At the importing and retail level, the opinions from trade sources were almost uniform. More orders are placed on Turkey and China. 'We were skeptical on China's quality but we were careful and selective when we imported and we were pleasantly surprised at the quality, which has been retailed satisfactorily,' observed Perm Bharwani of Serba Antik.
All this takes place in the optimistic glow of a possible recovery for the country. Economists at the Asian Development Bank detect signs of renewed confidence. They said investment spending may grow a modest 3.4 percent in 2003 and four percent by 2004. Manageable inflation, lower interest rates and a steady rupiah against the U.S. dollar are positive signs.
However, corruption, declining infrastructure, regulatory administration and tax uncertainty may hinder the forecast. And while in terms of security, the situation has calmed after the tragic Bali bombings, tourism, an important foreign exchange revenue generator, is yet to regain its past stature. And continued weakness in law enforcement along with a controversial judicial system in Indonesia has discouraged foreign direct investments.
The former textile giant, PT Texmaco group, (fiber to fabrics), which accumulated huge debts in the 1998 economic meltdown, filed a civil suit against Kompas daily, a leading Indonesian newspaper. The company is seeking $151 million in compensation for damages the company alleges were caused by the paper's systematic campaign to destroy the group through 300 news articles.
Meanwhile the real estate and property prices are booming and property investments are surging thanks to low interest rates.
Sources in the trade observed that political stability in Indonesia has improved during the last three years and expectations are that the 2004 elections will consolidate the mandate so that more market-oriented policies can be pursued.
Dunia Kain Import (Jakarta) distributors of low-medium furnishings observed that the outlook is positive at least for the near future. 'For a long time European lines were the ultimate reference point in quality terms but Turkey is fast catching up in quality with tempting price tags, small lot orders and acceptable payment terms just like European suppliers,' said C. Dadlani, proprietor.
'This is a good move and we manufacturers in Indonesia will be subjected to false competition if prescribed import taxes are not paid,' said Arifin Ateja, director, and Ateja Tritunggal Corporation, furnishing line manufacturer.
'Every country protects its industry and Indonesia is no exception, which is equally competitive in manufacturing with China. But we would be severely stressed if smuggling continues,' said Joseph Koshan, director PT Sinar Group (Bandung).
At the importing and retail level, the opinions from trade sources were almost uniform. More orders are placed on Turkey and China. 'We were skeptical on China's quality but we were careful and selective when we imported and we were pleasantly surprised at the quality, which has been retailed satisfactorily,' observed Perm Bharwani of Serba Antik.
All this takes place in the optimistic glow of a possible recovery for the country. Economists at the Asian Development Bank detect signs of renewed confidence. They said investment spending may grow a modest 3.4 percent in 2003 and four percent by 2004. Manageable inflation, lower interest rates and a steady rupiah against the U.S. dollar are positive signs.
However, corruption, declining infrastructure, regulatory administration and tax uncertainty may hinder the forecast. And while in terms of security, the situation has calmed after the tragic Bali bombings, tourism, an important foreign exchange revenue generator, is yet to regain its past stature. And continued weakness in law enforcement along with a controversial judicial system in Indonesia has discouraged foreign direct investments.
The former textile giant, PT Texmaco group, (fiber to fabrics), which accumulated huge debts in the 1998 economic meltdown, filed a civil suit against Kompas daily, a leading Indonesian newspaper. The company is seeking $151 million in compensation for damages the company alleges were caused by the paper's systematic campaign to destroy the group through 300 news articles.
Meanwhile the real estate and property prices are booming and property investments are surging thanks to low interest rates.
Sources in the trade observed that political stability in Indonesia has improved during the last three years and expectations are that the 2004 elections will consolidate the mandate so that more market-oriented policies can be pursued.
Dunia Kain Import (Jakarta) distributors of low-medium furnishings observed that the outlook is positive at least for the near future. 'For a long time European lines were the ultimate reference point in quality terms but Turkey is fast catching up in quality with tempting price tags, small lot orders and acceptable payment terms just like European suppliers,' said C. Dadlani, proprietor.
