The Secretary General of the Indonesian Furniture and Handicraft Industry Association (Himki), Abdul Sobur, has announced that existing orders held by furniture manufacturers are only sufficient for them to sustain production for about 8 weeks from 10 May. This is because overseas buyers have delayed placing new orders, reported ITTO.
He said companies with limited cash reserves will only be able to pay wages for a short time and as a result the only option at present is for companies to lay off employees.
He estimated that if 70% of furniture manufacturers who are members of the Association have to lay off workers around 280,000 wage earners could be affected directly and thousands indirectly affected.
Interest-free loan scheme for SMEs proposed to government
In related news, the Deputy Chairman of the Small and Medium Industries in Himki, Regina Kindangen, said many SME furniture and handicraft makers stopped work in mid-March as orders ran out. She pointed out that furniture and craft manufacturing is dominated by SMEs who are not well equipped to survive financially. The Himki noted the national furniture industry workforce is around 2 million.
The Director General of Small and Medium and Various Industries at the Ministry of Industry, Gati Wibawaningsih, has written to the Coordinating Ministry for Economic Affairs proposing an interest-free loan scheme for SMEs.
The Ministry of Industry has identified 10 industrial sectors, including the timber sector, badly affected by the lack of orders and lack of capital reserves to maintain the workforce.