The Center of Reform on Economics (Core) is concerned that rising production costs driven by inflation will reduce the competitiveness of the domestic textile industry amid the slowing momentum of the Covid-19 pandemic this year. Core Executive Director Mohammad Faisal asked the government to prepare policies that can maintain the competitiveness of the domestic textile industry in line with the upward trend in energy and raw materials that is still continuing along with the momentum of global economic recovery from the pandemic.

According to Faisal, the textile industry has become one of the priority industries whose competitiveness has recently declined due to competition with imported goods.

 "There are many things that are feared by business actors that there may be an increase in costs due to inflation from the input side, the market has not fully recovered, demand has not returned to its pre-pandemic position," said Faisal via voice message, Monday (28/3/2022).

Thus, said Faisal, the industry will be under pressure due to rising production costs while people's purchasing power has not fully recovered due to the rally in the price increase of basic necessities or Bapok since late last year.

"Moreover, there is competition with imported goods, therefore the government must provide convenience both in terms of cheaper energy costs or trade policies that support the competitiveness of domestic industries," he said.

Imports of fiber and yarn for the domestic downstream textile industry are projected to increase quite sharply amid the momentum for the recovery of people's purchasing power this year. The reason is that the supply of key raw materials such as purified terephthalic acid (PTA) from within the country experienced a significant decline at the beginning of this year.

"There are only two domestic PTA producers, one of which is Mitsubishi Chemical, which caught fire yesterday. According to information, it has not been able to operate normally again. This has caused PTA supply to be disrupted," said the Director of Textile, Leather and Footwear at the Ministry of Industry (Kemenperin) Elis Masitoh via WhatsApp message, Monday (28/3/2022).

PTA is the main raw material for the manufacture of textile products such as polyester and polyethylene terephthalate (PET). Later, the PTA derivative products will be used as raw materials for making yarns and fibers that are useful for the textile downstream industry.

Elis said the decline in domestic PTA supply this year has the potential to reduce filament and fiber production for downstream needs.