BULETIN TEKSTIL.COM/Jakarta- Many observers predict that 2023 will still be a difficult year for the textile industry to survive in the local and global markets.
Weakening demand from major exporting countries as well as the flood of imported products in the domestic market is evidence of the difficulties of the textile industry.
This is also a justification for employers to lay off employees. As a labor-intensive industry, textiles are very vulnerable to the issue of layoffs.
The Indonesian Chamber of Commerce and Industry (Kadin) notes that the number of workers in the textile industry reached 3.65 million people or around 18.79% of the total national manufacturing industry workers.
Dependence on the US dollar is also one of the reasons the textile industry continues to experience an increase in production costs. A real example is the Greenback which is showing its power against foreign currencies, including the rupiah.
According to Kadin, Indonesia is still facing high imports of cotton and other raw materials by the domestic textile industry, which is still quite high, reaching US$ 1,866.1 million. Meanwhile, Indonesia’s cotton exports were only US$ 868.4 million.
Energy costs also refer to dollar values. The average cost of electricity for production in Indonesia is USS 10 Sen/Kwh. This fee is high compared to other countries such as Vietnam and Bangladesh which is only USS 7 Sen/Kwh and USS 6 Sen/Kwh.
The condition of machines with low technology also causes textile productivity in Indonesia to lag behind. This encourages textile producers to prefer importing rather than producing their own.
Kadin Indonesia reported that textile exports in September and October 2022 fell by around 30% compared to the same period in 2021. This was as a result of the decline in demand from the US and Germany by 20% -30%.
The far-reaching effect of this condition is layoffs. Recently PT. Kahatex in Sumedang, West Java, reported that it had laid off 900 employees.
Referring to records issued by the Indonesian Textile Association/API, around 43,000 textile industry employees have been laid off since the Covid-19 pandemic.
Kadin admits that the challenges of the textile industry are very heavy, but Kadin hopes that layoffs are the last solution chosen by entrepreneurs.