A major textile company from Indonesia has announced bankruptcy, which could possibly leave approximately 50,000 employees jobless. However, the Indonesian government is making sure this won't happen.
The company, Sritex (PT Sri Rejeki Isman) reached a bankruptcy ruling after a debt restructuring agreement with creditors 2 years ago.
According to Bloomberg, the country's Deputy Minister of Manpower confirmed that regardless of the bankruptcy, the factory will remain operational to save 50,000 employees. Despite debt restructuring, Sritex has seen signs of financial recovery recently, hence, the agreement with the Indonesian government to maintain employment.
Sritex Textile Company's Decline
The COVID-19 pandemic severely affected textile companies with mounting financial difficulties due to declining orders. Since then, no major recovery has been recorded for the company.
Indonesian President, Prabowo Subianto, has already urged ministries to develop solutions and help rescue one of the country's largest textile manufacturers, per Jakarta Global.
Sritex, known for producing clothing for major global brands like H&M, Zara, and Uniqlo, is only part of a larger issue within Indonesia's domestic garment industry that has seen consecutive hardships since the pandemic, mostly affected by an influx of cheap imports from China. This included the emergence of Shein and other Chinese-based shops that trended online in recent years.
Industry leaders, in return, have pushed for stricter import regulations on top of reinstated anti-dumping and protection laws that have been protecting local Indonesian firms.
Without the move from the Indonesian officials, the laid-off employees in the textile industry would've climbed to over 65,000 after 15,500 employees were cut this year.
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