Indonesia Faces Risk Of Mass Layoffs As Textile Giants Prepare To Relocate From Vietnam

By Mohd Iswandi Kasan Anuar

JAKARTA, March 5 (Bernama) -- Indonesia’s textile industry is on the brink of a major crisis as over a dozen large manufacturers plan to relocate from Vietnam, sparking concerns of factory closures and widespread layoffs, industry leaders warned on Wednesday.

“If this relocation happens on a large scale, it could devastate local factories… Massive job losses across the industry are inevitable,” said National Association of Importers (Ginsi) chairman Subandi as quoted by Media Indonesia.

The warning comes amid financial turmoil at PT Sri Rejeki Isman (Sritex), once Indonesia’s largest textile company, defaulted on its debts in 2021.

The company, headquartered in Sukoharjo, Central Java, which previously employed tens of thousands of workers, has been forced to scale back production and shut down several facilities.

Industry groups fear that the arrival of foreign competitors could further destabilise already struggling local manufacturers.

“We don’t know how many workers these companies will bring from their home countries. If too many foreign workers are hired, fewer jobs will be available for locals, and mass layoffs will be unavoidable,” Subandi added.

Ginsi has urged the government to step in, emphasising the need to strengthen domestic industries rather than turning Indonesia into a relocation hub for foreign firms.

“If our factories lack the capital to modernise, the government must intervene and support them,” Subandi said, warning that without intervention, Indonesia’s textile sector may face a prolonged decline.

National Economic Council chairman Luhut Binsar Pandjaitan confirmed last week that 10 to 15 major textile firms are set to move their operations to Indonesia, with plans to establish facilities in Central Java, West Java, and East Java.

-- BERNAMA