Indonesia’s fragile garment industry may have to lay off hundreds of thousands of workers this year if the government is unable to rein in persistent dumping from China, an industry association official warned.

Redma Gita Wirawasta, chairman of the Indonesian Filament Yarn and Fiber Producers Association, said on Wednesday that dozens of factories are at risk of shutting down as they struggle to compete with cheap Chinese-made clothing that has flooded the market in recent years.

“We are getting information that some companies are starting to close their factories,” he said in an interview. Redma said he raised the concern with trade officials during a meeting on Tuesday in which industry leaders lobbied for raising non-tariff barriers including new labeling requirements and raising safety standards.

“If the government doesn’t do anything to halt Chinese products into Indonesia, I think another 500,000 people will lose their jobs this year,” he said, offering an estimate nearly double that of the government’s.

One of the nation’s biggest employers, Indonesia’s textile industry has struggled to compete with its regional neighbors, shedding some 80,000 jobs last year alone, according to one official estimate. 

Any widespread layoffs would further weigh on Indonesia’s economic momentum and derail President Prabowo Subianto’s target of pushing growth to 8% within his five-year term. Gross domestic product likely expanded 5% in 2024, according to a Bloomberg survey, below the government’s 5.2% goal.

Part of the problem for textiles, Redma said, is the Southeast Asian nation’s ability to effectively restrict illegal products from entering at the ports. Prabowo last month went said his government might sink ships smuggling textiles onshore “if needed” as authorities try to help the ailing domestic textile industry.

Indonesia has to contend with an extensive illegal market from China that Redma estimates averaged to about 1,000 containers reaching its shores every month. Much of the smuggled products are then sold sold on online platforms and in local markets. That, he said, has forced prices below production costs.

These woes, alongside weaker global demand and stiffer competition, have seen listed textile maker PT Sri Rejeki Isman furlough 3,000 workers, while PT Pan Brothers had to enter a deal to restructure more than $530 million in debt.

Redma is also worried that any tariffs administered by the incoming Trump government could exacerbate the inflow of Chinese goods, further adding pressure to local companies. 

Coordinating Minister for Economic Affairs Airlangga Hartarto was quoted by a local media this week saying he hopes to strike a deal with the incoming Trump administration to lower tariffs for Indonesian goods.

The closures “are happening from upstream to downstream — in the garment weaving sector, in spinning and also in the fiber sector,” Redma said. “It’s been very challenging.”