Workers at the Sri Rejeki Isman PT factory in Solo, Central Java. - Photo: Bloomberg
JAKARTA: Indonesian textile giant PT Sri Rejeki Isman is contesting a court decision that declared it bankrupt as the company owner pledged to keep its factory open and see through the revival of the business.
Sritex, as the company is more commonly known, filed an appeal on Friday (Oct 25), requesting a review of the local court’s bankruptcy ruling, according to the court’s website.
The court in Java island - where Sritex is based - had earlier granted the plaintiff’s demand to declare the company and its subsidiaries bankrupt for failing to meet payment obligations set in a debt restructuring agreement from 2022.
The appeal came as President Prabowo Subianto called for a meeting on Tuesday and ordered his ministers to come up with rescue options for the company, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.
The customs and excise office has already agreed to let the company resume import and export operations despite the bankruptcy verdict, Hartarto said after the meeting.
Sritex, which has sewn clothes for global brands including H&M, Uniqlo and Zara, is one of the country’s largest apparel makers and employs roughly 50,000 workers.
It fell into debt distress during the pandemic after orders slumped. Its total liabilities stood at US$1.6 billion as of end-June, relatively unchanged from two years ago when it secured the debt agreement.
"I assure you that there will be no layoffs of Sritex workers,” Deputy Minister of Manpower Immanuel Ebenezer Gerungan said during his visit to the company’s factory on Monday.
"This was agreed by the management represented by Sritex owner Iwan Setiawan Lukminto.”
The clothing maker has no intention of closing its factory and is focusing on continuing operations as its business and financial conditions have shown signs of recovery over the past few years, Lukminto was quoted as saying in the manpower ministry’s statement.
Not Alone
Indonesian textile industry’s woes extend beyond Sritex. Rival PT Pan Brothers is also seeking to restructure $325 million in debt.
The industry is one of the biggest employers in Indonesia and any widespread job losses would be an early setback for Prabowo’s new government, which aims to turbo-change economic growth to 8% from the current 5% pace.
Unemployment remains elevated in Southeast Asia’s largest economy, dragging millions out of the middle class since the pandemic.
"The clothing industry has the highest proportion of women labour participation and unskilled workers,” said Kiki Verico, an economist at University of Indonesia, on Tuesday. "These two are very politically sensitive groups.”
Domestic garment associations have demanded more government support to revive the sector, which has struggled to recover from the pandemic and has been hit by a flood of cheap imports, mainly from China.
Despite the reintroduction of some safeguard and anti-dumping duties, industry players are also asking the government to tighten recently revised import regulations to curb a surge in shipments.
The National Federation of Trade Unions recorded nearly 15,500 workers have been laid off in the country’s textile industry this year, according to Bloomberg Technoz, a partnership between PT Berita Mediatama Indonesia and Bloomberg Media Group, a division of Bloomberg LP, the parent of Bloomberg News. - Bloomberg
[ --With assistance from Harry Suhartono and Claire Jiao.]
