Tuntex Distinct said it is seeking court protection and Hualon Corp asked for government help in creditor talks, as the Taiwanese textile makers struggle with a loss of orders to cheaper manufacturers in Southeast Asia.

Tuntex Distinct, the textile-making arm of Tuntex Group, on Monday filed for court receivership - a status that would give it time to reorganise while stopping creditors from calling in NT$29.3bn ($876m) of loans to the company. Hualon asked Taiwan's Ministry of Finance to force banks to cut interest charges and extend repayment on NT$18.2bn of its loans.

The two companies are struggling as garment makers and other customers shift production to Asian economies with lower wage costs compared with Taiwan, one of the most developed economies in the region.

Taiwanese textile makers' overseas orders fell 2.9 per cent in the first four months to $4.6bn.

"Manufacturers in the downstream textile industry have mostly moved to China or Vietnam to help cut their production costs, so our client-base is shrinking dramatically," Hualon spokesman Chen Cheng-yen said. "We are still making monthly payments, though we want to ease that burden by cutting the interest rates."

Tuntex Distinct shares fell by their daily limit of seven per cent for a third consecutive day, to NT$0.86. Shares in Hualon, which wants creditors to reduce the average interest rate on its loans to six per cent from eight per cent, fell by their seven per cent limit for the second day straight, falling NT$0.11 to NT$1.48 a share.

"The irreversible trend is that Taiwan will continue losing its labour-intensive industries to China and Southeast Asian countries," said President Securities Corp chief economist Vickie Hsieh.

Tuntex, in a statement distributed by the Taiwan Stock Exchange, said it was seeking court protection and blamed a fire at its headquarters last week for the "difficulty to sustain its operation." The fire damaged three of four buildings at the Eastern Science Park complex, owned by the Tuntex Group, which has investments in textiles, petrochemicals, and property. Tuntex Distinct officials could not be reached for comment as the blaze destroyed the telephone switchboard and offices.

Hualon may be able to win government assistance in debt talks with its bankers. Under Ministry of Finance guidelines, qualified applicants are entitled to a six-month grace period on maturing debt while existing credit lines will be maintained, regardless of their actual financial status.

At the end of the quarter to March 31, NT$842.3bn or 5.89 per cent of total outstanding credits extended by domestic banks were non-performing, according to the central bank.

Another NT$465.5bn of loans, or 3.25 per cent of loans, may also turn bad and are "under surveillance," the bank said.

Loans under the finance ministry relief program are accounted as "under surveillance" by the central bank.

Hualon reported a loss of NT$4bn last year, compared with NT$231m in 1999. The company said it lost NT$599m in the first three months of 2001.