Lack of orders will force between 70 and 80 per cent of the textile industry to suspend operations for two to three months, Hilda Slavcheva, President of the Branch Chamber of Garments Industry, and Stefan Kolev, President of the Bulgarian Branch Union of Knitwear Industry, alerted a press conference on Monday. Kolev said that the best case scenario for the beginning of 2009 is 30 per cent job losses but the realistic figure is 50 per cent.

The textile industry employs between 140,000 and 160,000 people. Due to the 50 per cent contraction of EU demand for new clothes, orders for the textile factories which work with customers' materials will drop sharply.

Textile industry representatives said that money from the Bulgarian Development Bank (BDB) will go through the commercial banks, which may hike interest rates and service charges and thus make loans unaffordable to small and medium-sized enterprises. Only companies with good labor productivity, high quality and short order time will survive.

The 8 per cent interest rate asked by the BDB is too high because there is no way to guarantee a steady flow of orders. EU-wide, interest rates are plunging unlike Bulgaria where they remain high. To overcome the crisis, the industry needs cost cutting and, to this end, taxes and social insurance contributions must be temporarily reduced and VAT input tax must be recoverable within a shorter period, the textile industry representatives said.

Source: BTA