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End/August summary

Below is the summary of business and economic activities on End/August.

* Fuel price increased 150% on Mid/August and hit the spinning industry very badly. All spinners (particularly Polyester Textured Yarn) are forced to increase price around 20%. As a result, we have seen substantial loss of business from regular buyers in Latin America and Southeast Asia. We are facing severe competition from China and Taiwan as they can offer around 15% lower than Indonesian suppliers.

* The government is already brewing to increase retail fuel price by 40% as a result of the ever-increasing oil price. This is expected to hit the economy situation further as staple food prices and transportation costs will surely climb up. Lebaran holiday will only make it worse because consumers will spend more money to go shopping on this festive occasion. It is feared that inflation rate will climb to more than 10% by the end of this year. At this moment nobody is certain about the future of Indonesian economy as the figures are keep moving toward critical level. Furthermore, the government seems not coping very well and the actions taken are perceived as merely desperate moves.

* This chaos, however, opened up new chance to import yarn from China and we are actively promoting in local market, although the result is yet to be seen as prices from local suppliers are still at the same level as last month’s.

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