The apparel industry in the Purwakarta and Karawang provinces and other provinces is experiencing an alarming wave of worker layoffs.
Various garment factories are reportedly closing completely or moving operations to other provinces.
The Chairman of the Indonesian Fiber & Filament Yarn Producers Association (APSyFI), Redma Gita Wirawasta, revealed that only a few garment companies remain in Karawang.
“Many have closed down for good while others have moved to Central Java,” Wirawasta said.
Before 2014, around ten large garment manufacturing companies operated in Karawang. However, the Covid-19 pandemic began the layoffs, with several companies cutting production by 50 percent.
The slowdown in export markets since the beginning of this year was the second trigger for more layoffs or complete shutdown.
Redma said that this year’s garment export performance is expected to be 13 percent short over the earlier year, with exports falling by 15 percent till September 2023.
The third reason is the increasing influx of legally or illegally imported and cheap textiles and garments
The official data from the Central Statistics Agency (BPS) shows a decline in imports, but experts say there is a gap between official data and actual imports.
The final nail in the coffin was the wage increase, which has become a significant burden for garment companies, which were already under stress.
These companies have limited options for increasing product prices or even closing the business if they cannot accommodate the increase in production costs.
Experts aver that concrete steps are needed from the government and other stakeholders to restructure this industry to compete globally while maintaining its domestic market share.