The downturn in the Balinese economy following the second Bali bombing on October 1, 2005, has had a disastrous effect on the Island's garment industry which, according to a report in the Indonesian-language Tempo Interaktif is near collapse. According to the report, of 120 businesses in the garment trade prior to the bombing 70 are bankrupt due to declining orders from both international and domestic customers.
"Our situation is critical," said the Chairman of the Indonesian Textile Association (API), Mahendra, who estimates that through July 2006 some 15,000 textile workers have lost their jobs. Moreover, according to the API Chairman, there have been no steps by the government to alleviate the situation.
Mahendra laments that the textile sector is burdened by high interest rates and the lack of any tax relief, despite the current depressed economy. This is in sharp contrast to the period following the 2000 bombing of the World Trade Center (WTC) when local government deregulated the textile sector and reduced interest rates in order help Bali garment operators survive and avoid mass layoffs.
Mahendra called on the government of Bali to take a more proactive role by lobbying Bank Indonesia and the general banking community to help to help correct the current situation.
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