HIGH LENDING RATES HAMPER TEXTILE INDUSTRIES' GROWTH

Jakarta, June 17 (ANTARA) - High credit interest rates imposed by banks over the past three years have hampered the growth of textile industries, Textile Producers Association (API) Secretary General Ade Sudrajat said.

"Banks have been imposing high interest rates which ranged between 16 and 24 percent during the past several years," Ade Sudrajat said here on Wednesday.

He said that based on API data, the number of textile and textile product industries in 2005 was 2,650 employing 1,176 million workers. In 2008, the number of industries rose to 2,750 with an absorption of 1,312 million workers.

"I think there is something wrong with our textile industries which could only increase by 100 firms and with an increase of 130 thousand workers. It should have grown by 40 percent, he said," he said.

Sudrajat said that besides high bank interest rates, the regional autonomy era which produced new business players in the region also helped discourage the development of textile industries in the country.

Chairman of the Indonesian Synthetic Fiber Producers Association (APSYFI), Koestardjono Prodjolalito, said that banks in Indonesia took too much profit from businesses by imposing high interest rates.

"Now government banks are proud of the fact that they could reap trillions of rupiah in profit," he said.

On the need for investment, Sudrajat said that Textile and textile product industries need an investment of Rp60.09 trillion if they wanted to increase their exports and domestic sales in the coming five years.

Ade Sudrajat said the funds were needed to purchase raw materials, yarn , fibers, cloth, garments, workers' payment and new machines. "It will be difficult for us to increase our textile exports if we do not make new investments," Sudrajat said.

He said in the 2010-2015 period the average increase target of the country's textile exports to the main destinations was nine percent, domestic sales six percent and ASEAN destination 30 percent.***2***