In March 2025, the bankruptcy liquidation of Indonesian textile giant Sri Rejeki Isman (Sritex) caused a social shock. This century old enterprise with 10000 employees has announced its closure due to a failed debt restructuring, directly causing more than 200 upstream and downstream supporting manufacturers to face difficulties. The "ghost city effect" has occurred in the city of Solo, where its headquarters is located -30% of the commercial street stores have closed, and the community consumption index has declined by 18% year-on-year.

This is just the tip of the iceberg of Indonesia's manufacturing crisis: Yamaha motorcycle factory layoffs2000 people, the closure of Sanken Electric's West Java plant affects 1500 workers, false eyelash manufacturer Danbi lays off 40% of its workforce, and fast food chain KFC closes 12 stores to optimize its operational structure.

According to data from the Indonesian Federation of Trade Unions,Since 2023, 60 companies have initiated large-scale layoffs, mainly concentrated in the textile (58%), electronic assembly (22%), and automotive parts (15%) sectors. As a traditional industrial center, West Java province saw 1756 workers lose their jobs from January to October 2024, leading to a trend of hollowing out of labor-intensive factory clusters in the Puavagada region. The more profound impact is reflected in the quality of employment: the proportion of formal employment has decreased from 41% in 2019 to 37% in 2024, the number of gig economy workers has surged by 43% to 29 million, and the purchasing power of actual wages in the manufacturing industry has decreased by 6.2%.

Multidimensional pressure: Global changes intertwined with structural contradictions

External shocks intensify competition imbalance:Global demand contraction leads to a sharp decline in Indonesian textile export orders to Europe and America37%, coupled with the energy crisis caused by the Russia Ukraine war, industrial electricity prices are 15-20% higher than those in countries such as Vietnam and Bangladesh. The impact of imported goods is particularly severe: in 2023, the import value of industrial manufactured goods increased by 18% year-on-year, and the clothing, shoes, and hats category surged by 29%, among which non - The scale of imports through formal channels has reached the official statistics2.3 times. According to data from the Indonesian Textile Association, 21 textile factories went bankrupt in the first half of 2024, with 31 on the brink of bankruptcy, and inventory turnover days extended from 45 days to 78 days.

Concentration and outbreak of endogenous contradictions:Technological iteration lag becomes a fatal weakness——78% of textile enterprises have been using equipment for more than 10 years, with a digitalization rate of only 12% in the industry. The number of looms operated by each worker has increased from 3 to 8, but insufficient automation investment has limited efficiency improvement. The changes in consumption structure have added insult to injury: the size of the middle class has shrunk by 3.2%, the market share of local brands has fallen to 61%, and the proportion of clothing in household consumption expenditure has decreased from 7.3% to 5.1%.

Policy swings amplify market volatility:After the Ministry of Industry relaxed import restrictions in May 2024, the import value of textiles soared from 12.26 million US dollars to 23.98 million US dollars within three months, which conflicted with the shortage of raw materials for local enterprises. Although the government announced a 200% tariff on Chinese goods in July, the APSyFI association pointed out that illegal imported goods still occupy 35% of the market share through grey channels.

Pains of Transformation: Industrial Restructuring under the Impact of Digital Economy

The drastic changes in the local e-commerce ecosystem:Indonesia's largest local e-commerce platformBukalapak announced in January 2025 the closure of its physical commodity business and the transformation to virtual product trading. This unicorn, once valued at $5 billion, is struggling to compete with Shopee due to sustained losses (net loss of IDR 1.37 trillion in 2023)TokopediaThe giants are further squeezed by the low price strategy of China's cross-border e-commerce platform TEMU, whose product prices are generally 30% -50% lower than those of local platforms.TikTok ShopAfter merging with Tokopedia, 2024“Double Twelve”LargeGMV increased by 274%, with live streaming views exceeding 2.5 billion, completely changing the e-commerce landscape in Indonesia.

Global industrial chain reshuffle:Puma OEM factoryHorn Ming Indonesia has laid off 600 employees, halved orders from Nike suppliers, and laid off a total of 55000 employees from 108 clothing factories, indicating that global brands are restructuring their supply chains - Vietnam and Bangladesh have taken on 24% of Indonesia's lost textile orders. This transfer is directly related to the rising production costs in Indonesia: the comprehensive cost of the textile industry in 2024 increased by 42% compared to 2019, with logistics costs accounting for 25% of the increase from 18%.

The Road to Breakthrough: Systematic Reform and Strategic Adjustment

In recent years, the Indonesian government has implemented a series of industrial policy adjustments to promote industrial upgrading and high-quality economic development, showing a significant triple shift. In terms of technological upgrading, the government has introduced preferential policies to provide investment in automation equipment for enterprisesA 30% tax credit and a special upgrade loan with an interest rate of only 4% are provided for the textile industry to encourage enterprises to increase their investment in technology research and development and improve their level of production automation.

In the field of trade protection, the government has reduced the tariff differential on textilesExpand from 5% to 15%——25%, and established a 90 day fast anti-dumping mechanism aimed at protecting the domestic textile industry from the impact of low-priced foreign products and maintaining fair market competition. At the same time, in terms of market regulation, the government plans to implement an electronic traceability system for imported goods by 2025 to combat illegal imports, safeguard market order and consumer rights.

In addition, the Indonesian government is vigorously promoting the deep reform of the education system and investing in5 trillion Indonesian Rupiah Skill Reshaping Fund to be implemented in 200 technical schools in Germany“dual-system”The training mode focuses on cultivating professional talents in the fields of industrial robot operation, digital marketing, and green energy technology, with the goal of increasing vocational education investment to 1.5% of GDP by 2027. Faced with the challenges brought by the digital economy, the Indonesian government has implemented a differentiated competition strategy, supported the development of local e-commerce platforms, and planned to cultivate 1000 small and medium-sized enterprises to connectShopee MallBrand zone, establish local live streaming e-commerce base and cultivate 50000 digital marketing talents, while implementing "data localization" supervision on cross-border e-commerce, requiring TEMU and other platforms to source 30% of their goods locally to promote the deep integration of digital economy and real economy.

Global Mirror:middle income trapThe cracked sample

The Indonesian crisis reflects the widespread difficulties faced by emerging industrial countries. According to World Bank data,From 2011 to 2022, the proportion of manufacturing industry in Indonesia's GDP decreased from 23.8% to 18.3%, while in Vietnam it increased from 13% to 24% during the same period. This contrast stems from strategic differences: Vietnam focuses on developing electronic and mechanical manufacturing through the "2021-2030 Foreign Investment Orientation Strategy", attracting companies such as Samsung and Intel to establish a full industry chain; However, Indonesia is overly dependent on resource exports, with manufacturing investment accounting for less than 25% for a long time.

However, Indonesia's attempt at transformation provides new ideas: its“Green industrialization”Strategic plan investment23 trillion Indonesian rupiah, with the goal of building 50 Industry 4.0 demonstration factories by 2027 and increasing clean energy usage to 35%. If this leapfrog development can be achieved, it may become the first case of breaking through the middle-income trap by integrating traditional industries through the digital economy.

Indonesia's transformation battle is crucialThe fate of 20 million manufacturing workers determines the historical position of an economy with a population of 270 million. With the accelerated restructuring of the global supply chain, this resource rich country is standing at a crossroads: will it become a dumping ground for cheap goods or a hub for high-end manufacturing? The answer depends on policy implementation and industry synergy efficiency. As Indonesian economist Mohammad Chatib Basri said:“What we need is not more tariff barriers, but a comprehensive revolution that runs through education, technology, and governance systems.”