Indonesian Textile Entrepreneurs Alert: Raw Material Stock Depletes Significantly

Jakarta — Escalating tensions between Iran, Israel and the United States are intensifying concerns across various global economic sectors, including Indonesia’s domestic textile and textile product (TPT) industry. Business operators are beginning to assess potential supply chain disruptions and surging logistics costs resulting from the conflict in the Middle East region.

Redma Gita Wirawasta, Chairman General of the Indonesian Synthetic Fibre and Filament Producers Association (APSyFI), revealed that the most significant impact is likely to occur in raw material supplies, which have historically depended on the Middle East region, namely imports of monoethylene glycol (MEG), the primary raw material for polyester fibre production.

“From the raw materials perspective, we import 85% of MEG from the Middle East, and this appears to be what will be disrupted. We are attempting to redirect imports from Malaysia. Currently, our MEG stock is sufficient for more than two months,” Redma told CNBC Indonesia on Monday, 2 March 2026.

MEG is a key component in polyester production. The 85% dependency on the Middle East region makes the TPT industry highly sensitive to any distribution disruptions in the area. In the short term, domestic stocks are currently considered safe. However, should the conflict persist, price pressures are deemed unavoidable.

“If it continues, MEG prices will certainly rise because supply will be hindered. Currently, raw material prices from China are also beginning to increase because China’s crude oil supply from Venezuela has already declined, coupled with gas supplies from Iran which will likely also be disrupted, so all raw material prices will rise,” he explained.

Redma noted that MEG prices from the Middle East have historically been more competitive than Malaysian supplies. Nevertheless, the price differential is not substantially large, making import diversification a realistic option.

“The Middle Eastern products are indeed cheaper than Malaysian ones, which are slightly more expensive. However, the difference is not that significant. There is no problem with redirecting imports from Malaysia, as we have historically imported from Malaysia as well, albeit in smaller quantities,” he stated.

From a capacity perspective, Malaysia is deemed capable of meeting Indonesia’s requirements, particularly since domestic industry utilisation is currently not optimal. Redma explained that national polymer capacity reaches 1.7 million tonnes annually. Under normal or full-running conditions, MEG requirements could reach 700,000 tonnes yearly. However, with utilisation at approximately 50%, MEG consumption is only around 350,000 tonnes annually.

“Our polymer capacity stands at 1.7 million tonnes; if running at full capacity, our MEG consumption would be 700,000 tonnes annually. With utilisation at merely 50%, our consumption is only 350,000 tonnes. Malaysia’s MEG capacity is approximately 740,000 tonnes with local consumption around 250,000 tonnes, so capacity-wise they will be able to supply us,” he explained.

Alternative supply sources outside the Middle East and Malaysia are extremely limited. Other alternatives include relying on domestic production, although this remains less competitive from a pricing perspective.

“Besides the Middle East and Malaysia, there are no other sources. The alternative is to accelerate domestic production. Locally, there is capacity of approximately 300,000 tonnes, but only 50 tonnes are currently operational. Prices are higher than imports because of fuel-based costs; imports are gas-based,” he clarified.

For other raw materials such as Purified Terephthalic Acid (PTA), conditions are relatively safer because most supplies come from within the country.

“For other primary raw materials like PTA (Purified Terephthalic Acid), 95% is supplied domestically,” Redma stated.

However, he noted that pressures extend beyond raw materials alone. International trade routes affected by the conflict will inevitably drive increased logistics costs, both for imports and exports.

“Logistics costs will certainly rise, relating to insurance costs and extended transportation times,” he noted.

According to him, exports to Europe are most vulnerable to disruption.

“Exports to Europe will definitely be disrupted because of logistics costs and delivery times. Imports, it seems, will not be significantly affected because we import thread and fabric 90% from China,” he explained.

Currently, approximately 30% of Indonesia’s TPT exports flow to Europe and 40% to the United States. With Europe potentially disrupted by logistics challenges and the American market still shadowed by reciprocal tariffs, simultaneous pressure on the industry is possible.

“This will disturb the performance of the entire ecosystem. To maintain and improve performance, the government must provide policies to encourage the industry to capture the domestic market, which is currently 60% controlled by imported products,” Redma stated.

The data demonstrates that nearly 70% of Indonesia’s TPT exports depend on two main markets: Europe and the United States. When Europe is pressured by logistics disruptions and the US continues to face tariff obstacles, industry pressures could occur simultaneously.