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The textile industry in the country is still plagued by various negative sentiments. Apart from the invasion of imported textile products from China which in recent years has flooded the domestic market, the Indonesian textile industry has also been increasingly depressed due to the impact of the Covid-19 pandemic.

Since the third quarter of last year, the demand for textile products has actually started to increase. The Indonesian Textile Association (API) noted that the utility of the textile industry in the midstream has started to rise to the level of 70%.

However, since the beginning of this year, the textile industry has had to face new challenges from rising raw material prices. API Secretary General Rizal Tanzil said that the increase in crude oil prices would automatically increase the price of textile raw materials, which are petroleum derivative products.

As a result, Rizal said, the increase in prices upstream was rolling like a snowball downstream. Due to rising raw material costs, textile manufacturers will automatically raise the selling price of textile products.

"The problem is that the market is not ready to absorb the new prices due to weak purchasing power due to the pandemic," said Rizal.

The problem is getting worse because the textile industry does not receive a working capital stimulus from the government. In addition, banks are also more selective in channeling working capital loans to textile companies.

The impact of the crisis in the textile industry varies from company to company. Most issuers in the textile industry which listed their shares on the Indonesia Stock Exchange (IDX) experienced a decline in sales. The sales of several listed companies even fell quite sharply.

Meanwhile, several closed companies earlier this year also had to face Postponement of Debt Payment Obligations (PKPU). Call it, for example, PT Rayon Utama Makmur, PT Indah Jaya Textile Industry, and PT Rumagloria Sakti Tekstil Industri.

Large-scale textile companies such as PT Sri Rejeki Isman Tbk (SRIL) and PT Pan Brothers Tbk (PBRX) were still able to record performance growth last year.

Sri Rejeki Isman alias Sritex's income during the first nine months of last year still edged up by 1.34%. Its net profit also rose 2.18% to US $ 73.8 million. Meanwhile, Pan Brothers posted an increase in revenue of 6.5%. Its net profit shot up 32.5% to US $ 20.6 million.

Even though the performance is still growing, it does not mean that the two largest textile companies in Indonesia do not face any problems at all.

Both Sritex and Pan Brothers still have to face maturing debts which are quite large in value.

Pan Brothers has a syndicated loan worth US $ 138.5 million. This loan should have matured on 27 January. Meanwhile, Sritex has a syndicated loan worth US $ 350 million. The due date is still in January 2022.

The debt maturity that Pan Brothers and Sritex have to face is not a serious problem if both companies have sufficient liquidity.

Unfortunately, the liquidity of Pan Brothers and Sritex is currently at a drag. That is why the two companies are still struggling to face the risk of refinancing amidst tight liquidity.