Indonesia’s textile industry is nearing a crisis with a dozen major manufacturers planning to move operations from Vietnam to Indonesia, raising fears of factory closures and mass layoffs.
The entry of textile manufacturers from Vietnam will likely increase competition in Indonesia’s market. This influx of foreign rivals could further unsettle the market, making it difficult for local manufacturers to compete.
Subandi, chairman of the National Association of Importers (Ginsi), cautioned that a large-scale relocation could severely impact local factories, resulting in significant layoffs.
The warning follows the financial difficulties experienced by PT Sritex, Indonesia’s former largest textile company, which defaulted on its debts in 2021. Since then, the company ceased operations and shut down several facilities, resulting in the termination of nearly 11,000 employees, Exacerbating the challenges for local manufacturers who are already struggling to compete.
“We don’t know how many workers these companies will bring from their home countries. If too many foreign workers are hired, fewer jobs will be available for locals, and mass layoffs will be unavoidable.” Subandi stated.
Ginsi voiced worries that the arrival of foreign competitors could destabilize the market even more.
The association has called on the government to take action, emphasizing the need to strengthen domestic industries instead of turning Indonesia into a relocation hub for foreign companies. Subandi stressed the critical need for government support when factories lack the capital for modernization. He warned that, without such intervention, the textile industry is at risk of enduring a prolonged downturn.
Last week, National Economic Council chairman Luhut Binsar Pandjaitan confirmed that 10 to 15 major textile companies are planning to set up operations in Indonesia, with facilities slated for Central, West, and East Java. Although Indonesia’s manufacturing sector has exhibited growth, experts noted that this increase is largely confined to capital-intensive industries, while labor-intensive sectors continue to struggle.
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