Small Indonesian textile companies on the brink of closure

The textile industry in Indonesia is currently facing pressure from both inside and outside the country. The slowing economic growth of the country led to a decline in the people’s purchasing power causing lower demand for textile products in domestic market.

Ade Sudrajat, chairman of Indonesia Textile Association (API), said that due to lack of demand, the factories cannot produce as the goods produced 2-3 months back are still in their warehouses. Most of these companies are small-scale with 360 employees on average, he added.

As a result of this falling demand, more than 100 textile and garment makers are on the edge of collapse putting 36,000 jobs at risk.
Indonesia’s economy grew 4.67 percent in the April-June period, the slowest rate of expansion in five years, as exports suffered from weak global demand while domestic consumption also decreased combined with sluggish government and private investment.

Ade Sudrajat expects that the government will cut electricity tariffs by 40% to reduce the production cost and thereby helping local manufacturers to create competitive edge in the market. He also opined the government to come up with trade barriers for some textile imports to save the domestic market.