The Indonesian textile industry continues to face heavy pressure due to the strong flow of imported goods, which has not only depressed the domestic market but also triggered a wave of layoffs and factory closures. Data from the Indonesian Filament Fiber and Yarn Producers Association (APSyFI) shows that from 2023 to the end of 2024, seven textile companies have closed down, while 28 factories have stopped production completely.
Production and Wage Reductions
APSyFI Chairperson Redma Wirawasta explained that many companies have chosen to reduce production capacity and working hours rather than lay off workers. For example, the normal working day of six days per week is now only three days per week. "Workers' wages can finally be adjusted without having to bear the burden of large severance pay," said Redma.
However, the number of layoffs remains high. Redma noted that more than 18,000 workers have lost their jobs, although the actual estimate is as high as 250,000 workers. This includes workers who are gradually affected before finally being recorded as official layoffs.
Factory Closures and Mass Layoffs
Several cases of mass layoffs have occurred in this industry. PT Alenatex, for example, has laid off 700 workers in its latest round, after previously laying off 3,000 workers throughout 2023. PT Asia Pacific Fibers Tbk (POLY) has also stopped production in Karawang, resulting in 2,500 workers losing their jobs.
Overall, Redma estimates that more than 1.1 million workers in the textile sector have been affected, either through layoffs or reduced working hours. The decline in industrial utilization, from 75 percent in 2023 to below 50 percent in 2024, is a clear indicator of this crisis.
Root of the Problem: The Rise of Imported Goods
Redma assessed that the flood of imported goods, including illegal imports, was the main cause of this crisis. He criticized the government for policies that were considered not to touch the root of the problem. Incentives such as a 5 percent discount on working capital credit interest were considered ineffective, because companies actually lost their domestic markets.
"Where is there a company whose market is taken by imported goods and then told to buy new machines? The most important thing for entrepreneurs is the market, and the government is not serious about dealing with the problem of illegal imports," he said.
Trade Ministerial Regulation No. 8 of 2024
Deputy Minister of Manpower, Immanuel Ebenezer, accused the Minister of Trade Regulation (Permendag) No. 8 of 2024 as the main cause of the decline in the textile industry. This regulation is considered to be too lenient on imports of ready-made clothing, which ultimately destroys the competitiveness of local products.
At least 60 textile companies have laid off 13,061 permanent workers and not extended the contracts of 5,000 workers. Immanuel called the revision of Permendag No. 8 of 2024 an urgent mitigation step to save this industry.
The Indonesian textile industry is at a critical point. The flood of imported goods, inappropriate policies, and weak supervision of the domestic market have triggered a wave of layoffs and factory closures. Strategic steps and government support that are more focused on controlling imports are an urgent need to avoid the complete collapse of this sector.