Fuel price hike may force textile firms to cut workforce

Fuel price hike may force textile firms to cut workforce

Agence France Presse, Jakarta

Indonesian textile firms have started, or are planning, to reduce their workforces by an average of up to 30 percent due to rising costs as a result of higher fuel prices, an executive at the Indonesian Textile Association (API), Lili Asdjudiredja said on Thursday. "With fuel prices up, companies are trying to improve their efficiency, but many have been forced to lay off their workers," said Asdjudiredja, who chairs the API chapter in West Java. He said the textile industry employs around 2 million workers nationwide.

He said in Bandung, the capital city of West Java province, that a number of textile companies have already shut down but he gave no further details.

On Saturday, the government raised fuel prices by an average of 126 percent to cut fuel subsidies and keep the fiscal deficit within target. Asdjudiredja said higher fuel prices will drive up the costs of buying spare parts, raw materials and for transportation, among other things.

He estimated that the textile industry will face cost increases of 15 to 20 percent.