The weakening rupiah exchange rate is again putting pressure on the national textile industry. This condition is directly felt by upstream textile companies, which are now facing increasing production costs due to their high dependence on imported raw materials.
The Indonesian Filament Fiber and Yarn Producers Association (APSyFI) stated that the weakening rupiah is placing further strain on companies' cash flow. APSyFI Chairperson, Redma Gita Wirawasta, said many companies have begun making operational adjustments to maintain business continuity amidst cost pressures.
According to him, a number of companies have reduced raw material purchases and reduced production capacity to maintain cash flow. Although there have been no large-scale layoffs, many contract workers have reportedly had their contracts terminated.
He explained that the national textile industry remains highly dependent on imported raw materials, particularly for textile petrochemical products such as Mono Ethylene Glycol (MEG), approximately 85 percent of which is still sourced from abroad. Meanwhile, approximately 95 percent of the raw material for Purified Terephthalic Acid (PTA) is reportedly produced domestically.
This situation makes the textile industry even more vulnerable when the rupiah depreciates against the US dollar. Rising raw material import costs automatically increase production costs and suppress companies' competitiveness amidst market conditions that have not yet fully recovered.
APsyFI also urged the government to be more careful in managing foreign exchange and strengthening the domestic manufacturing sector. These steps are considered crucial to prevent the national industry from becoming continuously dependent on imported raw materials, which makes the manufacturing sector susceptible to currency fluctuations.