Based on data from the Statistics Indonesia, there was a negative growth in the textile and apparel industry sector in 2020 of -8.88% (Y-o-Y).
Meanwhile, in 2021, the sector is predicted to grow by 5.23% (Y-o-Y) in line with production activities that are supported by health protocols in accordance with government policies. Even though there has been positive growth, this growth is still far from the achievement of the sector in 2019 or has only recovered around 30%. The many obstacles in this sector make it difficult for players to improve their performance.
Even so, this does not indicate that all players in this sector have increased their performance by 5.23%. However, there are still a portion of the total players who contributed to this increase, while the rest are still in difficult conditions.
Constraints in the Textile and Apparel Industry Sector
There are several constraints that have caused the condition of the textile industry to deteriorate in recent years, including:
- Poor investment in the Indonesian textile industry has led to the relocation of industries centered in China. So it is necessary to improve the investment climate so that opportunities from industrial relocation in China can be taken by Indonesia and prevent many companies from bankruptcy.
- Most of the raw materials for the textile and apparel industry are still imported from other countries, the majority of which are competitors. The reason for using imported raw materials is because the production volume of quality products in Indonesia is insufficient and cannot cover demand. A better quality of imported products and product prices are not much different from Indonesian products. The price of imported products with the same quality is much cheaper. Apart from imported raw materials, as a labor-intensive company, the wages for employees are quite high. The increase in Minimum Wages (MW) that occurs every year causes production costs to swell which is not balanced with the volume of production and sales of products. As a labor-intensive company, the increase in MW greatly affects the company’s financial condition, especially in the current conditions of the textile and apparel industry sector.
- Domestic textile and apparel industries are unable to compete in the international market because they have a much higher selling price for products due to high production costs. In addition, the lead time from the manufacturing stage to the garment distribution is very long. The lead time for domestic textile production can take up to 120 days, much longer than in other countries which is only 60 days (0.5 times faster).
- The positive public sentiment towards imported products is higher than local products, causing the sales of products produced domestically to be lower than imported products.
Growth of Several Financial Accounts From Public Companies (Tbk)
Based on the Financial Report of public companies in the textile sector, September 2020, we can conclude that in the past 2020 there was a significant decrease in net sales / revenue, namely around 52.41% (YoY) and was followed by an even greater decrease in net income, namely reached 101.12% (YoY).
Meanwhile, for the calculation of the portion of the account size, it is known that the median amount of total assets owned by a public companies (tbk) is 186.21% of its net sales with a varying amount between 113.82% to 294.76% of its net sales.
Companies in the Textile Sector Involved in the PKPU (Postponement of Debt Payment Obligations) Case
It is noted that there are as many as 107 manufacturing companies involved in the PKPU case. Based on the type of industry, most of the companies came from the Textile Industry sector, amounting to 27.88%, while the rest were under 5% of the total. The high number of Textile Industry companies involved in PKPU cases is due to the poor economic conditions of the industry in recent years so that the obstacles that have emerged after the COVID-19 pandemic have made it even more difficult for these companies to survive.
