Indonesia’s textile industry has performed poorly recently. Export performance from September to October 2022 will decline by 30% compared with the same period in 2021, and the recession may continue until 2023.
According to the Indonesian Textile Association (API), Indonesian textile companies have laid off 45,000 employees, and some have reduced factory operating hours to reduce costs.
The Indonesian Employers Association (APINDO) has recommended to the government to strengthen industrial policies or take measures such as trade remedies to protect domestic industries.
Comprehensive reporting information, the recent decline in the performance of the Indonesian textile industry includes:
(1) Europe And the demand in the United States has dropped significantly, and Indonesia’s domestic purchasing power has not yet stabilized.
(2) Textile industry players believe that Indonesia is flooded with imported products, which affects the sales performance of domestic products.
(3) Indonesia’s textile industry still relies on imported raw materials. Taking 2021 as an example, Indonesia’s cotton imports amounted to US$1.86 billion, but its textile product exports were only US$860 million. The recent international inflation and the depreciation of the Indonesian rupiah against the US dollar have led to an increase in the cost of imported raw materials for the Indonesian textile industry.
(4) The price of electricity for production in Indonesia is 10 cents per kilowatt-hour, compared with Vietnam (7 cents per kilowatt-hour) and Bangladesh (cents per kilowatt-hour). 6 cents per kilowatt hour) is less competitive.
(5) The textile industry is a labor-intensive industry. According to statistics from the Indonesian Chamber of Commerce and Industry (KADIN), the Indonesian textile industry employs approximately 3.65 million workers, accounting for approximately 18.79% of the labor force. The increase in basic wages has increased costs for textile manufacturers.
