Archive for April, 2010

As they fold, Indonesia garment makers blame China (AP)

Sunday, April 25th, 2010 | Finance News

JAKARTA, Indonesia – Mufardi Rusli's neighbors hunch over tables covered in brightly colored fabric, the whirring of their sewing machines echoing across his Jakarta neighborhood. For Rusli, the sound is a bitter reminder of the $2 line of jackets that bankrupted him, costing him a garment business it took 15 years to build.

He blames himself. He blames the government. But most of all he blames China — specifically, the flood of cheap clothing that has poured into Indonesia this year under a free-trade agreement between the rising economic giant and its Southeast Asian neighbors.

The new competition quickly drove down prices, forcing Rusli to sell the jackets for less than they cost to make. Within months, he was broke and unable to pay his 22 workers.

The Indonesian government and many businesses leaders have hailed the pact as an economic boon that will allow the free flow of goods between countries encompassing 1.7 billion people, lowering prices for consumers and offering new opportunities for producers. The Trade Ministry expects two-way trade between Indonesia and China to double to $50 billion within five years. But some Indonesian industries say their small operations can't keep up with the Chinese juggernaut and they're calling on the government to do more to save their businesses from collapse.

"We're the ones losing this trade war," Rusli says, warning that soon his neighbors' sewing machines will follow his into silence.

The deal between China and six founding members of the Association of Southeast Asian Nations — Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand — went into full effect Jan. 1, eliminating barriers to investment and trade on 90 percent of products. Four more ASEAN countries — Cambodia, Laos, Myanmar and Vietnam — will be added by 2015.

The deal is expected to benefit Indonesian industries such as palm oil, rubber, coffee and coal by making it easier for them to feed China's voracious appetite for industrial raw materials and other commodities. Yet there are other industries — among them textiles and garments, tires, steel and footwear — who say they aren't ready to go head-to-head with China's aggressive, lower-cost producers and have called on the government to delay the elimination of protective tariffs on 228 product lines.

Despite signs ministers were not unanimous in supporting the trade pact, the government has said delaying is not realistic because it would involve renegotiating not only with China but with all the Southeast Asian nations.

Baso Rukmana, chairman of Indonesia's National Workers Union, predicted the trade deal would drastically increase unemployment in labor-intensive industries, with up to 7 million jobs lost.

"We are not ready to compete with China, and the government must have the courage to admit that," he said.

Rukmana's estimate of job losses couldn't be corroborated by other sources. Manpower Minister Muhaimin Iskandar said the government doesn't have figures on how many people could lose their jobs but has set up a task force to monitor the impact.

"We realize now that Indonesia is not yet quite able to compete in global markets with a full commitment to free trade," Iskandar said. "But we should not be left behind other ASEAN countries in facing global trade competition."

While some analysts believe the impact of the deal so far has been relatively positive — the contentious tariff lines account for only a fraction of the goods covered by the agreement — it is too soon to say how it will fully play out. Still, early trends on who will be hardest hit are clear.

"The main losers in Indonesia would be the low-skilled workers and the sectors that produce low-end products, mainly the textile sectors," said Maria Patrikainen, an Indonesia analyst with IHS Global Insight in London.

That would describe much of Kalibata, a working class neighborhood in south Jakarta that is home to an estimated 3,000 small garment businesses. The area is a warren of winding lanes, each lined with tiny brick and concrete buildings that double as both homes and factories.

One of the larger ones is that of 62-year-old Daris, whose front yard is a mess of cutting tables, sewing machines, bolts of fabric and stacks of children's shirts, skirts and hoodies in every color of the rainbow.

Daris, who like many in Indonesia uses a single name, said his business has been decimated since the trade deal went into effect.

A year ago he was selling market traders 1,800 bundles of clothes each week for a net profit of about $330. This year he said demand and profit has plummeted as those same traders load up on cheaper Chinese made clothes selling for 25 percent less. He said he's lucky to sell 600 bundles a week.

"Can you imagine trying to support a family of eight on ($55) per week? The government should know we are suffering," he said.

Daris said he has cut his work force from 25 employees to just 11, but even that may not be enough to keep him above water.

"If the business comes back in the next three months I can continue," he said. "If not I will close up shop and go back to my hometown. What else can I do?"

Indonesian Trade Minister Mari Elka Pangestu has acknowledged that many industries have valid concerns and ways should be found to help them.

But she says Indonesia's textile industry needs to become more competitive and should take advantage of the benefits of the trade deal, such as the cheaper cost of more sophisticated machinery. The government would do its part to address any unfair competition and work toward better remedies.

There are also parts of the industry that have benefited from the deal, Pangestu said, pointing to Indonesia's successful denim industry, which imports cotton from China turns it into denim and then exports it back to China.

She said that worries about the trade deal appear overblown.

"In a way there is this underlying, perhaps unfounded, fear that 'Oh we're not ready, we're going to be unable to compete.' And then when you talk it through and you look at the numbers and look at some of the sectors that are sort of screaming, it's not as bad as it turns out to be in terms of perceptions."

That explanation is little comfort, though, to Rusli, the bankrupt garment maker. He said he doesn't have much hope for the future of the garment makers of Kalibata.

"It's a bitter business now," he said, clutching the last of his red jackets, a morbid souvenir. "And there are thousands of others facing the same fate as me."


Associated Press Writers Irwan Firdaus and Niniek Karmini contributed to this report.


Lieberman encouraged energy bill will be on track (AP)

Sunday, April 25th, 2010 | Finance News

WASHINGTON – A day after bipartisan support for an energy and climate change bill appeared to crumble, a Senate sponsor said Sunday he was optimistic the coalition would regroup and lawmakers would consider the measure this year.

Sen. Joe Lieberman, a Connecticut independent, said in an interview with The Associated Press that he was encouraged after talking to Majority Leader Harry Reid, D-Nev., and Sen. Lindsey Graham, R-S.C., who were at odds over Reid's suggestion that an immigration overhaul might be considered ahead of the energy bill.

Lieberman said Reid pledged to bring the energy bill to the full Senate as soon as possible this year. In a separate conversation, according to Lieberman, Graham reiterated his support for the energy bill once it's no longer tangled up with immigration legislation.

"Now I'm encouraged," Lieberman said. Asked when the energy bill might advance, he said, "Sometime soon, as soon as we can get Lindsey on board."

Graham has threatened to withhold his support for the energy bill if Senate Democrats opt to deal first with immigration. He accused Reid of a "cynical political ploy" in suggesting the change, which comes as Reid faces a difficult re-election in heavily Hispanic Nevada and immigration legislation is a priority for Hispanics.

Sen. John Kerry, D-Mass., who worked with Graham and Lieberman on the energy bill, has postponed releasing the legislation on Monday in light of the dispute over what Reid may do with the immigration bill.

Reid's spokesman Jim Manley, discussing the energy bill, said Sunday that Reid "fully plans to bring the final product to the floor, but it's going to need broad bipartisan support."

Lieberman said it is unlikely immigration legislation would advance without Graham's support. Democrats are one vote shy of the 60 votes needed to push a bill toward a final vote. United opposition from Republicans would stop the bill from going that far.

Senators appearing on the Sunday television news shows disagreed about whether immigration should be on the Senate agenda this year and whether the energy bill could be handled before the end of the year if immigration legislation were considered first.

"I just don't think this is the right time to take up this issue with the border security problems, the drug wars going on across the border, 10 percent unemployment," said Minority Leader Mitch McConnell, R-Ky. "It just strikes me that our time would be better spent at the federal level on other issues."

Sen. Robert Menendez, D-N.J., said he believes whichever legislation is ready first will be dealt with first in the Senate. However, Sen. Saxby Chambliss, R-Ga., said he thought neither bill should be taken up because of the time needed for financial regulation legislation and for the annual budget bills.

McConnell appeared on "Fox News Sunday" while Menendez and Chambliss spoke on CNN's "State of the Union."


Obama: W.Va. miners died in pursuit of better life (AP)

Sunday, April 25th, 2010 | Finance News

BECKLEY, W.Va. – They lived and they died pursuing the American Dream, working in dangerous conditions underground to help keep the lights on across the country, a somber President Barack Obama said Sunday in a eulogy to the workers who died in the worst mine accident in a generation.

The president told the families of the workers killed in the Upper Big Branch mine, about 35 miles from here, that the nation would honor their memories by improving safety in the mines.

"How can we fail them? How can a nation that relies on its miners not do everything in its power to protect them?" Obama said. "How can we let anyone in this country put their lives at risk by simply showing up to work, by simply pursuing the American Dream?"

With workers' families sitting near him — and the Massey Energy Co. executive who runs the mine sitting near the rear of the hall — Obama spoke broadly about the 29 workers killed in the explosion.

"In coveralls and hard-toe boots, a hardhat over their heads, they would sit quietly for their hourlong journey, 5 miles into a mountain, the only light the lamp on their caps, or the glow from the mantrip they rode in," Obama said.

"Most days, they would emerge from the dark mine, squinting at the light. Most days, they would emerge, sweaty, dirty, dusted with coal. Most days, they would come home. Most days, but not that day."

Investigators have detected high levels of two potentially explosive gases inside the mine, and it could be a month before investigators can get inside to determine what caused the April 5 blast. Federal regulators have identified highly explosive methane gas, coal dust or a mixture of the two as the likely cause of the blast, but the ignition source is unknown.

The explosion will be the subject of a Senate hearing on Tuesday, with the nation's top mine safety official expected to testify.

Obama has ordered a broad review of coal mines with poor safety records and urged federal officials to strengthen laws he previously called "so riddled with loopholes that they allow unsafe conditions to continue."

Vice President Joe Biden, speaking before Obama, called miners "the spine of this nation" and "roughneck angels." He said the time would come to account for the safety conditions that led to the disaster.

"As a community, and as a nation, we would compound tragedy if we let life go on unchanged," he said. "Certainly, no one should have to sacrifice their life for their livelihood."

Obama and Biden both noted that the mining industry is more than a source of jobs in coal country — it's a source of energy for the entire nation.

"The men we remember here today went into the darkness so we could have light," Biden said. "It was dangerous work and they knew it. But they never flinched."

Obama linked the West Virginia deaths with the challenges Americans face from coast to coast amid a sour economy.

"All that hard work. All that hardship. All the time spent underground. It was all for the families. It was all for you," Obama said. "For a car in the driveway. For a roof overhead. For a chance to give their kids opportunities that they would never know, and enjoy retirement with their spouses. It was all in the hopes of something better.

"So these miners lived — as they died — in pursuit of the American Dream."

Before the somber memorial service, Obama and Biden met privately with the families of the 29 people killed in the explosion.

A row of 29 white crosses lined the main stage. Behind it were photos of the miners, and to the side stood a large wreath with 29 white roses, along with two yellow ones honoring two injured miners.

As West Virginia first lady Gayle Manchin read the miners' names, each of their families entered and placed a miner's helmet on a corresponding cross.

Gov. Joe Manchin also promised action to improve mine safety. "It takes brave men to work below the surface," he said. "I pledge to you: Your loved ones will not have died in vain."

Many people who gathered for the service wore black ribbons with gold shovels and pick axes; some wore coal miners' reflective clothing. Don Blankenship, chief executive of Massey Energy, mingled with the crowd before taking his seat near the back of the floor in the Beckley-Raleigh Convention Center.

Jean Cook of Pineville displayed a new tattoo on the back of her right shoulder in honor of her 21-year-old nephew, Adam Morgan, who died in the mine explosion. Cook said she was reluctant to attend the memorial because it would take her days to recover.

"Did I want to? Emotionally, no," she said. "All this has done a toll on my nerves. I just constantly cry. I don't think there's anything anybody can say."

Jonathan Mounts of Iaeger, who was on a rescue team that helped pull 11 bodies out of the Upper Big Branch mine, said he liked Obama's speech. "He understands our livelihood and our brotherhood," Mounts said. "We've got to work to support the nation."

Tom Jones, a laid-off miner from Raleigh County, said: "The president just showed he's grieving with us. That was comforting. Soothing. It was a good ceremony."


Associated Press writer John Raby contributed to this report.


On the Net:

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Senate Health, Education, Labor and Pensions Committee: