Indonesia's textile industry could "collapse" in three years if the government does not take urgent action to help scores of clothing companies by cutting taxes and red tape, a senior industry official warned on Thursday.

The stark message came from the chairman of the Indonesian Textile Association (API), Benny Soetrisno, who said the situation was made worse by a tough business climate, high interest rates and energy costs and frequent labour disruptions.

He predicted that ministers have to increase the industry's competitiveness if Indonesian garment makers are to survive the scrapping of international trade quotas in 2005.

If the situation continues to deteriorate, the textile industry will collapse by 2005. This will happen to export-oriented industries producing the same goods as their foreign competitors," he told Asia Pulse.

"An API survey has shown that the business climate in Indonesia is not as good as in our potential competitors such as China, Vietnam, and Thailand."

He added that as a recent example of the sector's woes "as many as 76 factories have closed down, some of them possibly relocated to other countries because of heavy burden that have to be borne at home".