Textile industry observer and former Secretary General of the Indonesian Textile Association (API) Rizal Tanzil Rakhman said the domestic textile industry will have to bear a lot of burden at the end of this year. The latest is due to the weakening of the rupiah exchange rate against the United States dollar in the last few weeks. “The impact on textiles is quite large. "Firstly, it will definitely have a big impact on those whose raw materials are imported, especially adjustments to existing contracts," he said, Tuesday (24/10). However, he added that the impact of the weakening rupiah might not be felt as much by producers whose raw materials are local, where purchases are made using the rupiah.

"For large industries whose raw materials are imported and sold for export, it has relatively little influence, as long as the reference exchange rate is also adjusted," he said.

Regarding what percentage of textile producers in Indonesia still use imported raw materials, Rizal Tanzil said he could not give an exact figure, but for Bonded Zones he said it was 100% imported.

"I can't confirm the total percentage yet. "But specifically for bonded areas, it will definitely be 100% imported, especially garments," explained Rizal.

Garments in bonded areas, he said, if we look at the structure, almost 60% of Indonesia's exports are driven by exports in this sector.

Regarding the side effects of the weakening rupiah, Rizal also highlighted the increase in machine prices which will become a new obstacle for producers.

"The real problem is not the raw materials alone, but friends who previously wanted to invest in machines, because the price of the machines was more expensive," he said.

Regarding whether there will be an increase in the price of finished goods for the textile industry, Rizal said that it is positive that there will be a price adjustment, because the weakening of the rupiah will have a multiplier effect on the textile industry.

"There should be an adjustment (in prices) because the effect is not only on direct production costs but there are multiplier effects, such as the effect of fuel increases on basic food increases," he explained.

Then, when asked how much the increase would be, Rizal answered that the increase would vary greatly.

"How many percent the increase is, it actually varies, because like this, if it increases by 5% upstream, it could be 3-4 times that (increase) downstream," he said.

"For example, the price of fiber increases by 3%, then it increases 3-4 times downstream or even more, so it depends on how much the raw material increases," he added.

He also added that the weakening of the rupiah adds to the burden on the Indonesian textile industry, which according to him is currently sluggish.

"But this is not good, textiles are also under pressure, the domestic market is also not good, the export market is also not progressive and tends to stagnate or even decline if I look," he concluded.