The Indonesian textile and textile products (TPT) industry is facing major challenges that have culminated in a layoff crisis involving more than 1 million workers. General Chair of the Indonesian Fiber and Filament Yarn Producers Association (APSyFI), Redma Gita Wirawasta, estimates that this figure is in line with the drastic decline in factory utilization since the fourth quarter of 2022.
The global economic slowdown which resulted in a decrease in demand from the main export market for Indonesian TPT products was one of the main factors that triggered this wave of layoffs. The attack on imported goods, both legal and illegal, has also eroded market share for the domestic industry.
Redma explained that previously, when factory utilization reached 80%, the textile industry directly absorbed around 3.7 million workers. However, with utilization falling to 45%, around 1 million workers will lose their jobs from 2022.
However, Redma emphasized that it was impossible for such a large reduction in utilization to only cause a 50% decrease in employment. In this context, he views that firm steps from the government, such as the implementation of Minister of Trade Regulation (Permendag) No 36/2023 concerning Import Regulatory Policies, are very important.
With the amendment to the Minister of Trade Regulation through Minister of Trade Regulation No. 3/2024, which came into effect on March 10 2024, it is hoped that the flow of imported goods can be better controlled. Redma emphasized that around 50% of the total workers who experienced layoffs were from the garment industry, followed by weaving and spinning factories.
He appreciated the government's steps in creating fair competition in the domestic market, which is expected to encourage healthy growth for the domestic textile industry. The hope is that domestic industry can once again enjoy increased demand, which in turn could open up opportunities for workers who have lost their jobs.
Nevertheless, Redma also emphasized that the challenges are not over, and the trend of layoffs is still continuing. The continuous flood of imported goods entering the domestic market without firm action from the government is one of the main factors causing this condition.
In an atmosphere that remains full of challenges, national textile entrepreneurs have expressed their inability to rely on the domestic market. Therefore, further steps may need to be taken to overcome the problem of excessive imports which are detrimental to the domestic textile industry.
In the long term, close cooperation between the government, business actors and society will be the key to overcoming this crisis and maintaining the sustainability and competitiveness of the Indonesian textile industry in the global market.