World Bank Backs Textile Revamp as Indonesia Advances Sritex Takeover

JAKARTA, Investortrust.id — Indonesia has accelerated plans to form a state-owned textile company by taking over PT Sri Rejeki Isman Tbk or Sritex on Thursday, Jan 29, 2026 in Jakarta, as the World Bank signaled support for revitalizing the labor-intensive textile sector through financing and modernization. The move links immediate job protection with a longer-term strategy to rebuild manufacturing competitiveness.

Coordinating Minister for Economic Affairs Airlangga Hartarto said the World Bank was open to supporting Indonesia’s textile revival, particularly through financing for modern machinery, following talks with World Bank Managing Director Paschal Donohoe. He said the discussions focused on job creation and sustaining growth amid global uncertainty.

“This reflects World Bank support to create employment and push for higher growth,” Airlangga said, adding that textiles remained a core labor-intensive sector aligned with Indonesia’s employment priorities.

Airlangga said the support was in line with the government’s plan to establish a state-owned textile enterprise under the state investment manager Danantara through the rescue of Sritex. “One path,” he said, emphasizing policy alignment between the government and multilateral partners.

The takeover plan was first outlined earlier this month after President Prabowo Subianto directed the government to revive strategic manufacturing sectors. Airlangga said Danantara would prepare about $6 billion, equal to Rp 101 trillion, to support the formation of the new textile state firm.

“The President reminded us that Indonesia once had a state-owned textile company, and this will be revived, with $6 billion in funding to be prepared by Danantara,” Airlangga said.

State Secretary Prasetyo Hadi said the takeover process was under way and aimed at keeping Sritex’s economic activities running, given its role as a major employer. He said protecting roughly 10,000 workers had become a key consideration for the government.

“So this is still in process, and we hope that in the near future all procedures can be completed so that Sritex must be saved in the sense that its economic activities must continue,” Prasetyo said at the Presidential Palace complex.

He said Sritex’s production had to be maintained because of its contribution to domestic supply and exports. “It employs around 10,000 workers and generates significant economic activity from garments and uniforms, both for domestic needs and exports,” he said.

Industry Minister Agus Gumiwang Kartasasmita welcomed the plan, calling it an affirmative policy to revive the textile and garment sector from upstream to downstream. He said the initiative was needed after years of pressure from weak global demand, import competition, and limited capital.

“I see this as part of the government’s effort to develop the textile industry from upstream, intermediate, to downstream,” Agus said.

Industry's Mixed Response

Industry groups responded with mixed views. The Indonesian Textile Association said it appreciated the government’s commitment but urged caution, arguing that funding would be more effective if channeled through an industrial textile fund to modernize existing factories.

“We appreciate the government’s commitment to support the textile industry, but this sector is highly competitive and requires efficiency and speed in adapting to global dynamics,” Indonesian Textile Association chairwoman Anne Patricia Sutanto said.

The Indonesian Filament Yarn Producers Association questioned whether the new state firm would focus on exports or import substitution. Chairman Redma Gita Wirawasta said achieving both targets would require far larger investment than currently planned.

“If only Rp 100 trillion is used to form a state-owned firm, the impact will be minimal. It would be better used as incentives to drive much larger private investment,” Redma said.

In contrast, the Indonesian Chamber of Commerce and Industry supported the plan, saying a state-owned textile firm could counter legal and illegal imports that had undercut domestic producers. Deputy chairman Saleh Husin said state backing could help lower costs through modern technology and energy efficiency.

“If it is truly aimed at fixing fundamental problems such as import flooding, a state-owned textile firm can support domestic production and restore competitiveness,” Saleh said.