The national textile and textile product (TPT) industry sector is projected to face severe challenges throughout the second half of 2026. Various economic indicators show that this labor-intensive industry has not yet been able to emerge from a vulnerable recovery phase, amidst sluggish domestic and foreign market demand.
Head of the Center of Macroeconomics and Finance at Indef, M. Rizal Taufikurahman, stated that Indonesia's manufacturing index standing at 46.9 in June 2026 is a strong signal of contraction in production activity. This has a direct impact on the decline in new orders and the inability of industry players to achieve optimal plant utilization levels.
In addition to macroeconomic factors, the heavy influx of imported textile products—including goods entering through illegal channels as well as dumping practices—poses a serious threat to the sustainability of local producers. Significantly cheaper imported goods continue to erode domestic market share, ultimately squeezing company profit margins and hampering new investment interest.
This situation has raised concerns over the increasing risk of layoffs in the textile sector. Companies are seen as forced to conduct large-scale efficiencies, ranging from reducing operational hours to downsizing the workforce, in order to survive amidst cash flow uncertainty and low order volumes.
As a solution, the government is urged to strengthen oversight of import entry points and align logistics and financing policies. Furthermore, accelerating the restructuring of industrial machinery and providing more targeted incentives are considered crucial for the textile sector to become a main pillar of national workforce absorption once again amidst increasingly fierce global competition.
