The weakening rupiah is again putting pressure on the Indonesian domestic textile industry. The impact is being mainly felt by fibre manufacturers, who heavily rely on imported raw materials
The Indonesian Filament Yarn and Fiber Producers Association (APSyFI) stated that the weakening rupiah is placing further strain on companies’ cash flow.
APSyFI Chairperson, Redma Gita Wirawasta stated that a number of companies have reduced raw material purchases and reduced production capacity to maintain cash flow.
“Although there have been no large-scale layoffs, many contract workers have reportedly had their contracts terminated,” he added.
He explained that the fibre manufacturing industry still relies heavily on imported raw materials, particularly like Mono Ethylene Glycol (MEG), of which approximately 85% is still imported.
This situation makes the textile industry even more vulnerable when the rupiah depreciates against the US dollar.
Rising raw material import costs automatically increase production costs and undermine company competitiveness amid market conditions that have not yet fully recovered.
APSyFI also urged the government to be more careful in managing the country’s foreign exchange reserves and strengthening the domestic manufacturing sector.
These steps are considered crucial to prevent the national industry from becoming increasingly dependent on imported raw materials, which makes the manufacturing sector vulnerable to currency fluctuations.
Image courtesy: Fleting & Fiber Studio
