Sritex had to lay off over 10 thousand people, while Sanken had to discharge more than 450 people.
The issue of layoffs has become increasingly widespread after the Indonesian Fiber and Filament Yarn Makers Association (APSYFI) revealed that 62 factories had stopped operating and furloughed thousands of employees from January 2023 to January 2025.
The layoff phenomenon indicated a slowdown in the domestic manufacturing industry, along with a decline in people’s purchasing power. However, if one examines the root of the problem, layoffs may arise from shifts in business strategy principles or delayed anticipation of technological developments.
Sanken Indonesia serves as a notable example. The government stated that the closure of the factory producing switch mode power supplies and transformers located in MM2100 Cikarang, Bekasi, was not attributed to Indonesia's business climate. Instead, it resulted from the decision of the parent company in Japan to shift its production base to semiconductors.
The layoffs at Sritex were not solely the result of an unfavorable business climate but were primarily caused by the company’s inability to pay debts exceeding Rp25 trillion (US$1.4 billion), which led to bankruptcy.
Meanwhile, the rampant imports entering the domestic market affected the 62 textile companies that closed their doors in the last two years.
The Ministry of Industry reported that the manufacturing industry is witnessing growth, with the number of new workers being absorbed exceeding the layoffs.
The ratio at which workers are absorbed into the manufacturing sector also rises annually. According to data from the National Industrial Information System (SIINas), the national industrial sector absorbed 1,082,998 new workers in 2024, surpassing the 48,345 layoffs reported by the Ministry of Manpower during the same period.
In addition, the total number of layoffs last year included not just workers from the manufacturing sector but also from all other economic subsectors.
The data indicates that many manufacturing companies have emerged and started production by absorbing more new workers, which is higher than the number of layoffs across various economic sectors.
Moreover, the number of non-oil and gas processing industry workers continues to increase, from 17.43 million in 2020 to 19.96 million in 2024, or an increase of 2.53 million people.
The ratio of new workers added to the manufacturing sector compared to those laid off reached 1 to 20. This indicates that for every worker laid off, the manufacturing sector is capable of creating and absorbing 20 new workers.
This ratio has improved over time, shifting from 1:5 in 2022 to 1:7 in 2023 and finally 1:20 in 2024. This increase showcases the positive performance of the Indonesian manufacturing sector in absorbing its workforce.
Minimizing impact
The government has devised various incentives to address the issue of utility or factory resilience to prevent closure and layoffs.
The most recent development is the extension of the industrial gas subsidy policy through certain natural gas prices (HGBT), ratified through the Decree of the Minister of Energy and Mineral Resources Number 76K of 2025.
Despite an increase in the gas subsidy price by US$0.5 to US$7 per million British thermal units (MMBTU), or equivalent to 29.41 liters of diesel, industrial sector entrepreneurs who receive the gas allocation acknowledge that this policy will improve the performance of the recipient sector.
The recipient sectors of HGBT are fertilizers, petrochemicals, oleochemicals, steel, ceramics, glass, and rubber gloves.
For instance, the Indonesian Ceramic Industry Association (Asaki) believes that this new policy will boost the utility of the ceramic sector and avoid layoffs in the industry. Through HGBT, Asaki will continue the second phase of expansion worth Rp4 trillion (US$237 million), which had been earlier delayed.
The expansion is expected to increase the domestic ceramic tile production capacity by 45 million square meters and absorb five thousand workers.
The rise of imported products
To address the rise of imported products that have reduced the utility of the textile and electronics sectors, the government plans to implement market protectionism through a revision of the Minister of Trade Regulation Number 8 of 2024, which is considered an import relaxation policy.
The Ministry of Trade is revising the regulation by referring to the regulations for each commodity, particularly for ready-to-wear clothing, which is seen as having overwhelmed the domestic textile industry, as experienced by Sritex and the 62 companies that are members of APSYFI.
Based on the results of the latest discussions with relevant stakeholders, the Ministry of Trade is looking for the right formula as a replacement regulation. Hopefully, business actors can accept the new procedures and requirements optimally.
The government is also striving to reabsorb laid-off workers through labor relocation or the creation of new jobs.
For Sritex, the Central Java Provincial Government will absorb affected workers through cooperation with several companies. Meanwhile, PT Sanken Indonesia offers worker relocation to companies in similar sectors, based on the Japanese Foreign Investment (PMA) results.
This method has also been implemented by other companies experiencing closure.
These efforts demonstrate the government’s commitment to mitigating layoffs. Nobody wishes to be impacted by this phenomenon, even though it can sometimes be unavoidable in the business sector. Consequently, the government and industrial entrepreneurs must keep preparing anticipatory steps to minimize the likelihood of layoffs or companies going bankrupt.
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Translator: Ahmad Muzdaffar, Resinta Sulistiyandari
Editor: Azis Kurmala
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