Labor group pushes for govt bailout as Indonesia’s Sritex faces bankruptcy

A leading labor group has urged the government to intervene and bail out Sritex, a major textile manufacturer on the brink of bankruptcy. The plea comes on the heels of President Prabowo Subianto‘s directive to his cabinet to urgently devise solutions to save the company, which employs approximately 50,000 workers.

Sritex, a significant player in the global textile market known for producing clothing for prominent brands like H&M, Rip Curl, and Forever 21, has been struggling under the weight of $1.6 billion in debt as of June. The crisis escalated last week when a court accepted a petition from one of its trade partners over unpaid debts, prompting fears of widespread layoffs.

“The government needs to provide bailout funds to settle Sritex’s debts,” urged Said Iqbal, chairman of the labor party and a prominent voice for workers’ rights in Indonesia. He emphasized the urgency of state intervention, suggesting that annulment of the bankruptcy ruling could also serve as a crucial step to prevent job losses.

Sritex’s financial troubles have been compounded by weakened global demand and competition from cheaper imported fashions. In 2022, the company reached a restructuring deal with its creditors to manage over $1.4 billion in debt. However, that agreement was recently nullified by the court following the petition from PT Indo Bharat Rayon, one of Sritex’s trade partners.

Industry Minister Agus Gumiwang Kartasasmita reassured the public that the government is actively exploring viable measures to sustain Sritex’s operations and mitigate the potential fallout from layoffs. “We are working diligently to ensure Sritex’s future,” he stated, as reported by state news agency Antara.

As of June, Sritex owed Indo Bharat Rayon approximately 101.3 billion rupiah ($6.48 million), a relatively small fraction of its overall liabilities. In response to the bankruptcy proceedings, Sritex has filed an appeal and is actively seeking government support, announcing its position through an Instagram post.

With the clock ticking on potential layoffs and the company’s future in jeopardy, the call for a government bailout has gained momentum as stakeholders hope for a resolution that will safeguard both jobs and the integrity of Indonesia’s textile industry.