In a bid to prevent mass layoffs, the Indonesian government is preparing a rescue plan for the struggling textile giant, PT Sri Rejeki Isman (Sritex). President Prabowo Subianto, recently inaugurated, has tasked multiple ministries with devising immediate solutions to avert job losses and ensure the company’s continued operations. 

 

The decision follows a court ruling declaring the company bankrupt after failing to meet debt obligations to a trade partner, PT Indo Bharat Rayon.  

 

With around 50,000 employees, Sritex plays a crucial role in Indonesia’s textile sector, supplying products for well-known brands like H&M, Rip Curl, and Forever 21, as well as military uniforms for NATO. Sritex’s debt currently stands at approximately $1.6 billion, a burden exacerbated by global demand shifts and cheaper imports.  

 

Industry Minister Agus Gumiwang Kartasasmita emphasized the government’s commitment to finding measures to stabilize operations and avoid layoffs.  

 

“President Prabowo ordered the Industry Ministry, the Finance Ministry, the State-Owned Enterprises Ministry, and the Manpower Ministry to immediately search for options and schemes to save Sritex,” Kartasasmita told CNBC Indonesia. 

 

The story reflects the broader challenges faced by Indonesia’s textile industry. Despite the manufacturing sector showing slight growth in confidence, with a September index reading of 52.48, the sector has not recovered from a surge in cheaper imported goods, especially from China, leading to factory closures and job losses.  

 

As of July, 22,356 layoffs were reported in the processing industry, including textiles. Around 30 textile factories closed between January and May 2024, with the Indonesian Filament Yarn and Fiber Producers Association citing 10,800 job losses.
 
 

In particular regards to the closure of Sritex, Redma Gita Wirawasta, chairman of the Indonesian Fiber and Filament Yarn Producers Association, said the company’s closure would disrupt the entire supply chain, as the company’s operations link upstream and downstream production processes.  

 

“If Sritex were to close, the entire supply chain would be disrupted, and our textile industry could collapse,” he told The Jakarta Post. 

 

Manpower Minister Yassierli also reassured the public that the government remains committed to preventing layoffs during the legal appeal process. “The government hopes that Sritex can continue to produce as usual,” Yassierli stated, adding that local labor inspectors are closely monitoring the situation to protect workers’ rights and ensure job stability.