The Indonesian government’s plan to revive a State-Owned Enterprise (BUMN) in the textile sector has become a major focal point for industry players and economic observers. This strategic move, directed by President Prabowo Subianto, aims to strengthen the national industrial structure through a massive funding injection of $6 billion (approximately IDR 95 trillion) managed by the Danantara investment agency. The initiative comes as a direct response to the fragility of the domestic textile value chain, particularly in yarn production, weaving, and finishing processes that have long struggled against the tide of foreign products.
Responding to this grand plan, the Indonesian Synthetic Fiber and Filament Yarn Producers Association (APSyFI) has given a positive signal. APSyFI Chairman, Redma Gita Wirawasta, stated that this policy is not a sudden development but the result of in-depth studies involving industry stakeholders. Redma views the presence of a textile BUMN not as a threat or a competitor to the private sector, but as a tool for the government to better understand the harsh realities on the ground. "The existence of a textile BUMN is expected to help the government better understand the unfair competition the industry has faced from dumped and illegal imports," Redma remarked.
However, Redma emphasized that a massive budget and the formation of a new entity alone will not suffice without a total overhaul of the business climate. According to him, reforming trade policies, ensuring transparency in licensing bureaucracy, and providing competitiveness incentives are absolute prerequisites. He believes that if managed correctly, the $6 billion investment could act as a catalyst for further private sector investment, potentially reaching $60 billion. For APSyFI, the SOE should serve as an engine to fill gaps in the supply chain rather than crowding out an already saturated market.
On the other hand, skeptics from academia have warned about efficiency risks. Wijayanto Samirin, an economist from Paramadina University, urged the government to proceed with caution, noting that the textile sector has historically been managed more efficiently by private entities. He warned that state intervention through a BUMN that competes directly with already fragile private producers could inadvertently increase the risk of layoffs. This concern is particularly relevant if the new SOE lacks a clear focus on segments currently untapped by the private sector.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, clarified that the urgency behind this formation also relates to Indonesia's position on the front lines of global tariff risks, particularly from the United States. By reviving the textile BUMN, the government aims to modernize machinery and deepen industrial integration so that Indonesia is not merely a "tailor" for the world, but a high-quality raw material producer. The primary challenge now lies in ensuring that the collaboration between Danantara, the new SOE, and the private sector functions harmoniously without sacrificing existing players who have long fought to keep the national textile industry alive.
