Jakarta \u2014 Escalating tensions between Iran, Israel and the United\nStates are intensifying concerns across various global economic sectors,\nincluding Indonesia\u2019s domestic textile and textile product (TPT)\nindustry. Business operators are beginning to assess potential supply\nchain disruptions and surging logistics costs resulting from the\nconflict in the Middle East region.<\/p>\n
Redma Gita Wirawasta, Chairman General of the Indonesian Synthetic\nFibre and Filament Producers Association (APSyFI), revealed that the\nmost significant impact is likely to occur in raw material supplies,\nwhich have historically depended on the Middle East region, namely\nimports of monoethylene glycol (MEG), the primary raw material for\npolyester fibre production.<\/p>\n
\u201cFrom the raw materials perspective, we import 85% of MEG from the\nMiddle East, and this appears to be what will be disrupted. We are\nattempting to redirect imports from Malaysia. Currently, our MEG stock\nis sufficient for more than two months,\u201d Redma told CNBC Indonesia on\nMonday, 2 March 2026.<\/p>\n
MEG is a key component in polyester production. The 85% dependency on\nthe Middle East region makes the TPT industry highly sensitive to any\ndistribution disruptions in the area. In the short term, domestic stocks\nare currently considered safe. However, should the conflict persist,\nprice pressures are deemed unavoidable.<\/p>\n
\u201cIf it continues, MEG prices will certainly rise because supply will\nbe hindered. Currently, raw material prices from China are also\nbeginning to increase because China\u2019s crude oil supply from Venezuela\nhas already declined, coupled with gas supplies from Iran which will\nlikely also be disrupted, so all raw material prices will rise,\u201d he\nexplained.<\/p>\n
Redma noted that MEG prices from the Middle East have historically\nbeen more competitive than Malaysian supplies. Nevertheless, the price\ndifferential is not substantially large, making import diversification a\nrealistic option.<\/p>\n
\u201cThe Middle Eastern products are indeed cheaper than Malaysian ones,\nwhich are slightly more expensive. However, the difference is not that\nsignificant. There is no problem with redirecting imports from Malaysia,\nas we have historically imported from Malaysia as well, albeit in\nsmaller quantities,\u201d he stated.<\/p>\n
From a capacity perspective, Malaysia is deemed capable of meeting\nIndonesia\u2019s requirements, particularly since domestic industry\nutilisation is currently not optimal. Redma explained that national\npolymer capacity reaches 1.7 million tonnes annually. Under normal or\nfull-running conditions, MEG requirements could reach 700,000 tonnes\nyearly. However, with utilisation at approximately 50%, MEG consumption\nis only around 350,000 tonnes annually.<\/p>\n
\u201cOur polymer capacity stands at 1.7 million tonnes; if running at\nfull capacity, our MEG consumption would be 700,000 tonnes annually.\nWith utilisation at merely 50%, our consumption is only 350,000 tonnes.\nMalaysia\u2019s MEG capacity is approximately 740,000 tonnes with local\nconsumption around 250,000 tonnes, so capacity-wise they will be able to\nsupply us,\u201d he explained.<\/p>\n
Alternative supply sources outside the Middle East and Malaysia are\nextremely limited. Other alternatives include relying on domestic\nproduction, although this remains less competitive from a pricing\nperspective.<\/p>\n
\u201cBesides the Middle East and Malaysia, there are no other sources.\nThe alternative is to accelerate domestic production. Locally, there is\ncapacity of approximately 300,000 tonnes, but only 50 tonnes are\ncurrently operational. Prices are higher than imports because of\nfuel-based costs; imports are gas-based,\u201d he clarified.<\/p>\n
For other raw materials such as Purified Terephthalic Acid (PTA),\nconditions are relatively safer because most supplies come from within\nthe country.<\/p>\n
\u201cFor other primary raw materials like PTA (Purified Terephthalic\nAcid), 95% is supplied domestically,\u201d Redma stated.<\/p>\n
However, he noted that pressures extend beyond raw materials alone.\nInternational trade routes affected by the conflict will inevitably\ndrive increased logistics costs, both for imports and exports.<\/p>\n
\u201cLogistics costs will certainly rise, relating to insurance costs and\nextended transportation times,\u201d he noted.<\/p>\n
According to him, exports to Europe are most vulnerable to\ndisruption.<\/p>\n
\u201cExports to Europe will definitely be disrupted because of logistics\ncosts and delivery times. Imports, it seems, will not be significantly\naffected because we import thread and fabric 90% from China,\u201d he\nexplained.<\/p>\n
Currently, approximately 30% of Indonesia\u2019s TPT exports flow to\nEurope and 40% to the United States. With Europe potentially disrupted\nby logistics challenges and the American market still shadowed by\nreciprocal tariffs, simultaneous pressure on the industry is\npossible.<\/p>\n
\u201cThis will disturb the performance of the entire ecosystem. To\nmaintain and improve performance, the government must provide policies\nto encourage the industry to capture the domestic market, which is\ncurrently 60% controlled by imported products,\u201d Redma stated.<\/p>\n
The data demonstrates that nearly 70% of Indonesia\u2019s TPT exports\ndepend on two main markets: Europe and the United States. When Europe is\npressured by logistics disruptions and the US continues to face tariff\nobstacles, industry pressures could occur simultaneously.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesian-textile-entrepreneurs-alert-raw-material-stock-depletes-significantly-1772464115", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }