Bankrupt and Mass Layoffs Hit Textile Industry
- Freepik
Jakarta – Several textile companies in Indonesia are now experiencing bankruptcy and causing layoffs. Bank Mandiri revealed the reason why many textile industries have gone out of business.
Head of Bank Mandiri's Industrial and Regional Research Department Dendi Ramdani said that the disruption in the textile and textile products sector is not due to slowing domestic economic activity.
However, this is more due to weakening global export demand.
“The contraction in furniture and garments is clearly caused by the decline in demand in developed countries or export destination countries,” Ramdani said at the Mandiri Macroeconomic Outlook event on Tuesday.
Ilustrasi tekstil/baju/pakaian.
- Freepik/jcomp
He said the export value performance of the textile and textile products (TPT) industry contracted by 5 percent in March 2024, along with the decline in the furniture and wood industries which contracted by 3 percent and 23 percent respectively.
According to him, this condition made the industry's growth contracted throughout 2023. He explained that the growth of the textile industry was minus 2.04 percent, although in the first quarter of 2024 it grew positively by 2.64 percent.
Then the furniture industry in 2023 contracted by 0.03 percent, and in 2024 improved to 1.66 percent.
Meanwhile, the wood industry did not contract despite growth of only 1.2 percent in 2023, although in the first quarter of 2024 it improved to 3.97 percent.
“We know that the global economic downturn has greatly affected export performance in the manufacturing sector, and these sectors are labor-intensive,” he said.
Meanwhile, Head of the Mandiri Institute Teguh Yudo Wicaksono said that fashion spending in the first quarter of 2024 was relatively high, which based on Mandiri Spending Index data was at the level of 178.1.
“So spending in the first quarter is still relatively solid and this is shown by the national household consumption expenditure data from our latest GDP,” said Yudo.
Nevertheless, he reminded that the fashion spending index was not as fast as other sectors such as foodstuffs or processed food which grew strongly in the first quarter of 2024.
The index number reached 454.7, while in the first quarter of 2023 it was only 209.9 and the first quarter of 2022 was only 127.2.
“Indeed, the increase in fashion is not as drastic as foodstuffs and restaurants. This may be felt by department stores and fashion, not as fast as in previous years,” he concluded.
