Textile Industry Crisis in Indonesia: Layoffs Surge Amid Import Influx

Summary:
The textile industry in Indonesia is facing severe challenges, marked by a significant wave of layoffs. Since early 2024, around 13,800 workers have been terminated due to declining export demands and an influx of cheaper imported goods. Ristadi, President of the Confederation of Nusantara Trade Unions, highlighted that six textile companies have closed and four have reduced their workforce. This trend, exacerbated by uncertain import regulations and lack of government support, is expected to continue until 2026.
Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies, emphasized that high operational costs and inconsistent government policies have driven many factories to relocate to countries like Vietnam and Bangladesh. He also pointed out that the local market is flooded with both legally and illegally imported goods, further harming domestic producers. Since 2019, 67 textile companies have either closed or downsized, resulting in nearly 200,000 layoffs.
The industry’s decline is attributed to several factors, including high-interest rates, weakened purchasing power, and the depreciating rupiah, which increases the cost of imported raw materials. Without substantial policy changes to support the local industry, the situation is likely to worsen over the next two years.