Indonesian Textile Industry Faces Crisis with 21 Factory Closures, 150,000 Layoffs
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Editor
29 June 2024 14:23 WIB
TEMPO.CO, Jakarta - Indonesia's textile industry is struggling, according to the chairman of the Indonesian Fiber and Filament Yarn Producers Association (APsyFI), Redma Gita Wirawasta. As of June 2024, 21 textile factories have closed and another 31 are at risk. Since 2022, the capacity utilization of the factories has dropped significantly.
"Until the second quarter of 2022, our capacity utilization was still 72 percent," he said by phone on Friday, June 28, 2024. He explained that a number of textile and garment companies that were members of ApsyFI had closed.
According to Redma, the company's utility continues to decline. It is currently down to 45%. "Since Covid-19, it has collapsed," he said. The downturn in the textile industry has been going on for a long time. Meanwhile, the glory of textile factories was last strengthened in 2010-2011 after the decline in the 1998 crisis.
He said the decline was due to two main factors. First is the ASEAN-China Free Trade Agreement (2012), which increased competition from cheaper Chinese imports. Second is the global disruption due to the COVID-19 pandemic and the Russia-Ukraine war, which further affected production and demand.
During the Covid-19 pandemic in 2020, ports in China stagnated. Stocks of Chinese products begin to enter Indonesia, even illegally. Over time, Redma said, textile stocks increased. In addition, the goods are sold in Indonesia at low prices. A flood of cheap and possibly illegally imported textiles from China was seen as a major threat.
The industry has experienced massive layoffs due to the downturn. Redma said there would be massive layoffs in 2024. The reduction in the number of employees occurred in 2022-2023 due to the reduction in production. Redma estimated that 150,000 textile and garment workers lost their jobs in 2023 alone (large and medium industries only).
Ikhsan Reliubun
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