JAKARTA - The weakening of the rupiah exchange rate against the US dollar is believed to risk suppressing people's purchasing power while slowing down the economic turnover of the real sector, especially the textile and textile products (TPT) industry.
The Indonesian Textile Association (API) said that the rupiah exchange rate, which has broken through the level of Rp17,300 per US dollar, will have a direct impact on the increase in the price of raw materials and logistics costs, which are mostly still dependent on imports.
"If the weakening of the rupiah continues, in the medium to short term it will push consumer prices, because raw materials and logistics costs are also more expensive. This could result in a decrease in economic turnover in the real sector," said API Chairman Jemmy Kartiwa in a written statement received by VOI, Friday, April 24.
According to Jemmy, the domestic market for textiles and garments is still under pressure, especially due to the decline in government spending and the increase in supply chain costs. In the midst of these conditions, the domestic industry is also faced with fierce competition with imported products, both legal and illegal.
He said that the price of domestic products is still behind imported products. "The interests related to the cost of production are a priority to be carried out. The decline in purchasing power will have a direct impact on the consumption of textile and garment products," he said.
Jemmy emphasized that exchange rate stability was a crucial factor in maintaining the cost structure of the TPT industry. In addition, the increase in domestic demand is considered to be driven by optimizing government spending, especially by prioritizing the procurement of domestic products.
"So, it can boost the performance of textile and garment at the small and medium level," he explained.
API also appreciates the synergy between the Ministry of Industry (Kemenperin) and the Ministry of Trade (Kemendag) in encouraging labor-intensive industries through various new regulations. However, the association believes that efforts to protect the domestic market must still be strengthened to maintain the sustainability of the industry and employment.
In the future, API hopes that the government together with Bank Indonesia (BI) can formulate strategies to mitigate exchange rate fluctuations to maintain the stability of the cost of imported raw materials, such as cotton and synthetic fibers, and prevent a surge in industrial operating costs.
The performance of Indonesian TPT exports at the beginning of 2026 showed a positive trend. Throughout 2025, the sector grew by 3.55 percent with export value reaching 12.08 billion US dollars and recording a trade balance surplus of 3.45 billion US dollars. Ready-made clothing products still dominate export contributions.
The TPT industry also recorded an investment of IDR 20.23 trillion in the first quarter of 2026 with the absorption of labor approaching 4 million people. The industry confidence index was at 51.86 in March 2026, which indicates an expansion phase.
However, industry players still face uncertainty regarding the Indonesia-US trade agreement, especially regarding the potential for zero-percent tariffs on textile products.
The API assessed that export opportunities remain open through other trade cooperation such as the Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA) as well as exports to the Canadian and Eurasian markets.
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