TEMPO.CO, Jakarta – The national economic slowdown has a major impact on the textile industry. Until now, at least 18 local textile factories have stopped operating and are forced to send employees home.
"Most of those factories still use old technology that is not efficient anymore," Ade Sudradjat, chairman of the Indonesian Textile Association, told Tempo yesterday.
According to Ade, factories with less sophisticated machineries are experiencing 30-40 percent production declines. Meanwhile, factories with advanced equipment are seeing a production decline of about five percent.
Out of a total of 5,340 textile enterprises, about 60 percent are still using less modern machines.
This production decline, said Ade, is driven by weakening domestic demand. Inevitably, companies are forced to send their employees home as they have cut the number of working days.
Industry Minister Saleh Husin admitted that some industries have been laying off their employees. "Most of them are labor-intensive industries such as footwear and textiles," he said.
According to Saleh, the wave of layoffs in the sectors occurred due to a weakened purchasing power that causes low market absorption.
Enny Sri Hartati, director of the Institute for Development of Economic and Finances, predicted a bigger wave of layoffs if no action is taken to boost purchasing power.
She said the government could help increase people's purchasing power by stabilizing the prices of basic commodities and staple foods, so that the public can have enough money left to buy secondary goods.
URSULA FLORENE SONIA | JONIANSYAH (TANGERANG)