Buzz Over Reports of Krakatau Osaka Steel Closure and Mass Layoffs: What Business Leaders Say

Jakarta, CNBC Indonesia - The farewell moment of employees at PT Krakatau Osaka Steel (KOS) was captured in a touching video that went viral on social media. In the circulating footage, workers are seen hugging each other, while others take photos together holding farewell signs that depict a sense of loss as well as hope for a fresh start. Some also signed their colleagues’ clothing as mementos. The atmosphere was emotionally charged, feeling sad yet warm from the camaraderie built over time at the workplace. Amid the news, the Indonesian Chamber of Commerce and Industry (Kadin) has spoken out. Vice Chairman of the Coordinating Division for Organisation, Communication, and Regional Empowerment of Kadin Indonesia, Erwin Aksa, stated that his organisation is still investigating the information regarding layoffs at the steel company. “Kadin Indonesia is observing the circulating information related to layoffs at PT Krakatau Osaka Steel (KOS). To date, we are still confirming and coordinating with relevant stakeholders to ensure the factual conditions on the ground, including the company’s operational status,” Erwin told CNBC Indonesia on Monday (4/5/2026). He emphasised that if operations are indeed halted or production adjusted, impacting the workforce, it becomes a serious concern for the business world. “From a business perspective, such decisions are generally influenced by a combination of factors, including production cost pressures, particularly energy and raw materials, tight global competition, especially from lower-priced imported steel products, and domestic demand dynamics that have not fully recovered,” he explained. According to him, the steel industry is highly vulnerable to global pressures, including energy price fluctuations and overcapacity in the international market. “Moreover, the steel industry is a sector that is very sensitive to global economic fluctuations, including energy prices and overcapacity conditions in the international market, which in recent times have pressured domestic producers’ margins,” he said. Nevertheless, Kadin Indonesia reminds that any business adjustment process must prioritise workers’ fates. “Kadin views it as important that every business adjustment process upholds principles of prudence, transparency, and protection for the workforce, including fulfilment of employees’ rights in accordance with applicable provisions,” Erwin stated. Looking ahead, Kadin encourages joint steps between the government and business actors, from domestic market protection to logistics and energy cost efficiency, as well as accelerating national strategic projects to absorb domestic industrial products. Additionally, dialogue between companies, workers, and the government is deemed essential to find the best solutions. Meanwhile, President of the Indonesian Confederation of Trade Unions (KSPI) and President of the Labour Party, Said Iqbal, admitted he has not yet received direct reports regarding the factory closure and layoff news. “KSPI has not heard about it yet.. Today we will check on the ground,” Said Iqbal said when contacted separately. On the other hand, the government has previously confirmed the closure of PT Krakatau Osaka Steel’s operations. Deputy Minister of Industry (Wamenperin) Faisol Riza stated that the decision is related to the financial condition of the parent company in Japan. “Oh yes, we have (received news of the PT Krakatau Osaka Steel closure),” Faisol said when met at the Parliamentary Complex, Jakarta, on Wednesday (4/2/2026). He explained that Krakatau Osaka Steel is facing financial pressures, making it difficult to compete in the global steel industry. “If there is indeed an indication that Osaka Steel company is facing financial difficulties,” he clarified. According to Faisol, the decision is a direct directive from the company’s headquarters in Japan. “So there is indeed a call from the centre that they cannot compete with others and are facing financial difficulties, so they have decided to close,” he added. As background, PT Krakatau Osaka Steel is a joint venture between Osaka Steel Co., Ltd. and PT Krakatau Steel (Persero) Tbk, established in 2012 and commencing operations in 2016. The factory, located in the Krakatau Industrial Estate, Cilegon, has an investment value of around US$200 million with a production capacity of up to 500,000 tonnes per year and employs about 170 workers.