36,000 Jobs at Risk as Small-Scale Textile Factories on the Verge of Collapse i

Indonesia is struggling to meet its tax revenue target set for 2015. (SP Photo/Joanito de Saojoao)

By : Eva Fitriani | on 11:05 AM September 02, 2015
Category : Business, Economy

Jakarta. More than 100 textiles and garment manufacturers are on the brink of collapse due to declining domestic demand, threatening 36,000 jobs, a business association said.

“The goods produced two or three months ago remain in the warehouse,” said Ade Sudrajat, chairman of Indonesia Textile Association (API), as quoted by Investor Daily on Tuesday.

A majority of the companies that are currently suffering are small-scale, employing about 360 workers on average, Ade said.

These manufacturers sell their wares solely to local market.

“There was no demand, so those factories cannot produce,” Ade added.

The Indonesian economy expanded at 4.67 percent in the April-June period, its slowest in five years as the purchasing power of its consumers took a hit from lower commodity prices in the global market, and sluggish government and private investment.

Some 7.45 million of Indonesia's working age adults are unemployed as of February, up by 300,000 people from the same period a year ago, data from Central Statistics Agency show.

Ade hopes the government will cut electricity tariffs by 40 percent to help local manufacturers compete with imported textiles.

He also called on the government to erect trade barriers for some textile imports, in order to protect the local market.

The Trade Ministry in July required batik importers to acquire a special permit and limit the number of batik-importing ports in Indonesia.

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