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70% of textile companies could go out of business because of COVID-19: Association
Some 80% of textile companies have halted production while facing cashflow issues.
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Workers produce knitwear at the Rajong Binong Jati Center, Bandung, West Java, on March 6. (Antara/Raisan Al Farisi)
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s COVID-19 continues to batter the Indonesian economy, 70 percent of textile and textile product (TPT) companies face permanent closure as a result of plunging domestic and export demand, an industry group has warned.
At the moment, 80 percent of textile companies have halted operations temporarily while facing cashflow issues, so financial support from the government is urgently required according to the Indonesian Filament and Fiber Producers Association (APSyFI).
“We have cashflow difficulties because even though we have no income, we still have to pay penalties to the state electricity and gas companies while also paying our workers’ social security fees,” APSyFI secretary general Redma Gita Warawasta said in a press release on Wednesday.
The association warned that massive business closures could cause a spike in unemployment, as around 1.8 million TPT industry workers are already furloughed or laid off because of the pandemic.
According to the Industry Ministry’s latest estimate, the TPT industry employs around 135,000 workers annually, making up 22.5 percent of the total 600,000 workers in the industrial sector.
Redma said APSyFI and the Indonesian Textile Association (API) had conveyed their request for relaxation policies from the government but without any significant development.
One of the associations’ requests includes penalty fee waivers from state electricity company PLN and state gas company PT PGN for textile companies with electricity and gas consumption below the minimum threshold.
“Our request for penalty fee waivers is reasonable because the government has declared [COVID-19 pandemic] a national disaster. But in reality, neither PLN nor PGN regard the pandemic as a national disaster and they are still imposing penalty fees,” the APSyFI statement reads.
The association also complained about the financial sector not providing credit relaxations to textile companies, even though the Financial Services Authority (OJK) has issued regulation No.11/2020 on credit restructuring for companies impacted by the pandemic.
“There could be a spike in nonperforming loans from the TPT industry if the situation continues,” Redma said.
