📚 Acrostics Anatomy: Sritex’s Desperate Cling
Sritex waged a futile campaign to remain as a going concern.
📒 Quick Take: Diverging Textile Strands (20 December 2024)
📒 Quick Take: Sritex’s Creditors Race to Plant Their Flags (22 December 2024)
📒 Quick Take: Sritex and the Myth of “Going Concern” (10 January 2025)
📒 Quick Take: Sritex Tussle Turns Dangerous (14 January 2025)
📒 Quick Take: Sritex’s Mysterious Job Numbers (15 January 2025)
📒 Quick Take: Indonesia’s Bad Apples (23 January 2025)
📒 Quick Take: Indonesia’s Wave of Layoffs (7 February 2025)
📒 Quick Take: Diverging Textile Strands
20 December 2024
Sritex’s appeal against its bankruptcy was rejected by Indonesia’s Supreme Court.
Pan Brothers got a reprieve after most creditors approved its PKPU proposal at the behest of the Indonesian government.
Indonesian textile company Sri Rejeki Isman (Sritex) is nearing the end of the road, while its peer Pan Brothers lives to see another day.
On Wednesday (18 December 2024), the Supreme Court rejected Sritex’s appeal and upheld the bankruptcy ruling of the Semarang Commercial Court. While the news might be upsetting for Sritex’s workers, as I wrote two months ago there was little legal basis for the Supreme Court to overturn the lower court’s decision.
Sritex failed to pay one of its suppliers in accordance with its local in-court restructuring (PKPU) agreement, so this trade creditor’s petition to cancel the deal and declare Sritex bankrupt was granted by the court.
Even though Sritex kept pointing out that the supplier accounted for a fraction of its total debt, the question is simple: Did it pay the creditor or not? If not, then even the best lawyers wouldn’t have much room to manoeuvre.
While there was a past case of an appeal being accepted on the grounds of humanitarian or public interest, such a move might be difficult to justify in Sritex’s case. The judges may also not want to open a Pandora’s Box containing questions on which other borrowers should be allowed to escape from bankruptcy.
Sritex still has the option of applying for a judicial review (peninjauan kembali), but the company is bleeding by the day while having to prevent mass layoffs as directed by the government. Sritex’s bank accounts were frozen by the court-appointed administrators handling its liquidation and its raw materials were gradually running out.
Even though President Prabowo Subianto ordered his ministers to rescue Sritex’s workers, the reality is their hands are tied and bailing out the company is not an option.
The government already had to roll out fiscal incentives to soothe the public over an upcoming value-added tax hike. Nationalizing Sritex is also not feasible considering that state-owned garment manufacturer Primissima is in its own financial trouble and had to lay off workers earlier this year.
What’s next for Sritex’s lenders?
It seems that offshore bondholders are still pursuing some recovery from Sritex’s liquidation as they had appointed a local counsel to file their claims to the administrators. The bond trustee reportedly told the noteholders only four days before the deadline that it was not responsible for registering their claims and that it was not monitoring the developments.
It’s uncertain if foreign creditors will get any money back. As I wrote before, an independent auditor that was appointed during Sritex’s PKPU process in 2021 impaired 64.7% of the reported inventories totalling USD 710.6 million. It also made an allowance for impairment losses that represented 55% of Sritex’s total receivables of USD 222.7 million.
A banker friend said that an option for Sritex’s private creditors is to investigate whether their money was used for its intended purpose or channelled elsewhere. But this friend acknowledged that the lenders are “already under pressure on the write-off, let alone to fork up additional expense for an expensive investigative audit.”
While the use of third-party litigation funding is well-established in jurisdictions such as the US, UK and Australia, it is “only in an embryonic stage in Asian jurisdictions”, according to a 2018 article written by WongPartnership lawyers. A restructuring friend said that litigation funders may not want to touch Sritex as the company is bankrupt and pursuing the people involved could be an uphill task.
Turning to Pan Brothers, it managed to get a reprieve after more than 90% of its creditors approved its latest restructuring proposal on Wednesday.
This came after Coordinating Minister for Economic Affairs Airlangga Hartarto summoned Pan Brothers’ management and key creditor SC Lowy’s chief investment officer to a meeting on 5 December, Bloomberg reported. Hartarto reportedly said that the government didn’t want to see job losses and would not bail Pan Brothers out if it went bankrupt.
The government could still intervene in Pan Brothers’ case because it was going through an Indonesian restructuring after previously completing a Singapore scheme of arrangement, whereas Sritex defaulted on its PKPU agreement and Indonesian law allowed its creditor to file it into bankruptcy. In short, Pan Brothers still had a second shot while Sritex ran out of chances.
Under Pan Brothers’ revised proposal, bondholders were given an additional option to swap their existing 7.625% notes into new ones with a 15-year tenor and 1% annual interest, Bloomberg reported.
It’s hard to imagine any creditor being happy with this “option”, but they probably decided that it wasn’t worth being blacklisted by the Indonesian government over a single credit.
While Pan Brothers’ path may have diverged from Sritex for now, it must find a way to avoid falling off the cliff later on.
📒 Quick Take: Sritex’s Creditors Race to Plant Their Flags
22 December 2024
High-yield debt refinancings often involve “passing the bomb” before it blows up in a creditor’s hands.
Sritex’s creditors are now racing to stake their claims on the assets being liquidated.
I used to be hooked on this zany Japanese arcade game called Hyper Bishi Bashi where the objective is to bash the heck out of three multi-coloured buttons to clear different stages.
In one of the game rounds, the players must keep passing a bomb to each other and you’ll lose if the bomb explodes in your hands. It’s harder than you think because you must estimate how many times you should handle the bomb relative to the other players and throw it to someone else in time.
The game might seem wacky, but the concept is actually applicable to many high-yield debt refinancings.
In the first place, high-yield debt is high-risk, high-return because the borrowers that turn to this market are typically those that cannot get cheaper funding for various reasons, such as weak cashflow, high capital requirements, or a challenging business environment.
As a lender, everything’s fine if it can enjoy juicy yields until it’s taken out by another lender. The problem is when nobody wants to play the game anymore and the credit blows up in everyone’s face.
In March 2019, Duniatex Group’s weaving unit Delta Merlin Dunia Textile (DMDT) issued a USD 300 million bond partly for refinancing, but these notes crashed when its sister spinning company missed a loan payment. Bondholders suspected that the group entities were not ringfenced from each other and these fears were proven true when DMDT failed to pay its first coupon merely six months after issuing the bond.
At that time, another textile giant based in the Central Java city of Solo, Sri Rejeki Isman (Sritex), tried to assure concerned lenders that it was nothing like Duniatex, according to friends with knowledge of the matter. But Sritex’s house of cards also started collapsing when some banks cut their exposure to the textile sector after being burned by Duniatex.
Sritex proposed a two-year extension for its USD 350 million syndicated loan, citing the impact of the pandemic, and it was accepted by banks holding 58.6% of the facility as of early 2021. Sritex also tested the market for an up to USD 325 million bond, but investors didn’t want to be left holding the bag as they questioned why the company planned to refinance short-term loans with a more expensive bond.
Everything came to a head in March 2021, when the syndicated loan bookrunners held up the deal closure to request more information from Sritex about its working capital lines. The syndicated loan extension fell apart and the panic spread to the bondholders when Sritex issued a strongly worded press release blaming the bookrunners.
This is the point of no return and Sritex eventually stitched a local in-court restructuring (PKPU) deal, with some creditors accusing the company of pulling every trick in the book to secure votes.
Fast forward around three years later and Sritex went bankrupt after a supplier took it to court for defaulting on its PKPU agreement. Even though Sritex’s appeal was rejected by the Supreme Court, the Indonesian government is pushing it to continue production and has asked state-owned lender Bank Negara Indonesia (BNI) to lead the creditors.
It’s unclear how a bankrupt textile company running out of raw materials is supposed to churn out clothing without fresh capital. The BNI officials are in for an uncomfortable conversation with their fellow bankers, as one of them will inevitably ask who’s willing to put in new money and everyone will likely fall silent.
Sritex is taking the last legal resort of applying for a judicial review, but this is a long shot and creditors are urging the court-appointed administrators to proceed with the liquidation process.
The administrators received IDR 32.63 trillion (USD 2 billion) of claims that were yet to be verified as of 13 December 2024, local media reported. The long list of creditors even includes a Korean BBQ restaurant that was allegedly owed IDR 12.5 million (USD 773).
As of 20 December 2024, the administrators reportedly identified 179 ownership and right-to-use certificates for land and buildings, as well as thousands of movable assets such as factory equipment and vehicles. As we head to a new year, Sritex’s creditors are likely racing to stake their claims on these assets and squeeze out any recovery.
For creditors, “Pass the Bomb” has turned into “Plant the Flag”. That’s the nature of the game, but the ultimate losers are the workers who never signed up for it.
📒 Quick Take: Sritex and the Myth of “Going Concern”
10 January 2025
Sritex’s workers shelved a planned protest after a government official assured them that the textile business can go on.
While the court-appointed administrators have the option of keeping Sritex as a going concern, its problems are multi-faceted.
Indonesia’s Sri Rejeki Isman (Sritex) entered the new year in a zombie state, stuck between the living and the dead while being propped up by the myth that it can continue as a going concern.
The company controlled by the Lukminto family has become a symbol of the collapse of Indonesia’s labour-intensive textile manufacturing industry, creating a headache for the new government.
Sritex – which reportedly employs around 50,000 people at the group level – contributes to the local economy and has long been a significant link in the textile chain.
Around 10,000 workers reportedly planned to protest in Jakarta next week, demanding that the government keep its promise of protecting them after the Supreme Court upheld Sritex’s bankruptcy.
However, these workers shelved their plan after Deputy Manpower Minister Immanuel Ebenezer Gerungan visited Sritex’s factory in the Central Java regency of Sukoharjo and urged them to leave matters to the government.
In his speech to the workers, Gerungan said that the state can “force” the court-appointed administrators to ensure Sritex’s business continuity. He also accused the team of four administrators of being “irresponsible” by skipping a meeting with Sritex’s management that was set to be mediated by the Manpower Ministry.
This rhetoric is questionable for several reasons.
First, according to Indonesian law, the authority to handle Sritex’s assets following its bankruptcy verdict would have shifted from the management to the administrators, who are tasked with liquidating those assets and distributing the proportional value to creditors.
Second, the administrators were not responsible for Sritex’s woes as the management had racked up over the years an estimated IDR 32.63 trillion (USD 2 billion) of debt that it is unable to repay.
Third, Sritex’s financials showed that it has been selling goods below its costs – resulting in gross losses – while operating cashflow is negative mainly due to a drop in cash from customers and stubbornly high payments to suppliers. In short, Sritex’s business is unsustainable.
Fourth, there seems to be a misconception that the going concern route is a panacea that can somehow cure Sritex from bankruptcy as if it never fell ill in the first place. While Indonesia’s Bankruptcy Law does give the administrators the option of continuing the business, in reality this can only be done in certain circumstances.
In an opinion piece published on local newspaper Kontan, Irvin S.T. Sihombing, a member of the Indonesian Receivers and Administrators Association (AKPI), cited the example of apartment and hotel operator Star Prima that was declared bankrupt in 2021.
Star Prima’s administrators decided to temporarily run its assets until they could find a buyer, based on the consideration that the selling price could fall further if its operations were stopped and its electricity supply was cut off.
In Sritex’s case, the administrators may face their own challenges if they were to maintain it as a going concern, according to Sihombing. Indeed, while I have a lot of respect for the legal profession, is it reasonable to expect a bunch of administrators to know how to operate a textile factory overnight?
Without a new investor or lender who’s willing to provide fresh capital, Sritex will likely struggle to tackle its multi-faceted problems, which are financial, legal and political in nature. Pretending that these problems don’t exist and that business can go on as usual is not the solution.
BAHASA INDONESIA VERSION
Quick Take: Sritex dan Mitos “Going Concern”
Sri Rejeki Isman (Sritex) memasuki tahun baru dalam kondisi seperti zombie, terpuruk antara hidup dan mati selama ditopang mitos bahwa bisnisnya bisa berjalan seperti sedia kala.
Perusahaan yang dikontrol oleh keluarga Lukminto tersebut telah menjadi simbol keruntuhan industri tekstil Indonesia yang padat karya, membuat kepala pemerintahan baru pening.
Sritex – yang diberitakan mempekerjakan sekitar 50,000 orang di grupnya – berkontribusi ke ekonomi lokal dan sudah lama menjagi bagian penting dari rantai tekstil.
Sekitar 10,000 pekerja diberitakan berencana unjuk rasa di Jakarta minggu depan, menuntut pemerintah untuk menepati janji melindungi mereka setelah Mahkamah Agung mengukuhkan kepailitan Sritex.
Tetapi pekerja-pekerja menunda rencana tersebut setelah Wakil Menteri (Wamen) Ketenagakerjaan Immanuel Ebenezer Gerungan mengunjungi pabrik Sritex di Sukoharjo, Jawa Tengah, dan megimbau agar mereka menyerahkan masalah ke pemerintah.
Dalam pidatonya kepada para buruh, Wamen mengatakan bahwa negara bisa “memaksa” kurator – yang telah ditunjuk pengadilan – untuk memastikan keberlangsungan usaha Sritex. Beliau juga melayangkan tuduhan bahwa tim yang berisi empat kurator tersebut “tidak tanggung jawab” karena tidak hadir di rapat dengan manajemen Sritex yang dimediasikan Kementerian Ketenagakerjaan.
Retorika ini patut dipertanyakan karena beberapa alasan.
Pertama, berdasarkan hukum negara Indonesia, kewenangan untuk mengurus harta Sritex pasca kepailitan telah beralih dari manajemen ke kurator, yang ditugaskan menjual aset tersebut dan membagikan nilainya kepada para kreditur sesuai proporsinya.
Kedua, kesulitan Sritex bukan tanggung jawab kurator karena manajemenlah yang menimbun utang sejumlah IDR 32,63 triliun (USD 2 miliar) selama bertahun-tahun dan saat ini tidak mampu membayar utang tersebut.
Ketiga, laporan keuangan Sritex menunjukkan bahwa perusahaan selama ini menjual barang di bawah beban pokoknya – sehingga menghasilkan kerugian bruto – sementara arus kas dari aktivitas operasi negatif terutama karena penerimaan kas dari pelanggan menurun dan pembayaran kepada pemasok tetap tinggi. Secara ringkas, bisnis Sritex tidak bisa dipertahankan dalam kondisi ini.
Keempat, sepertinya ada salah persepsi bahwa rute going concern adalah obat yang bisa menyembuhkan Sritex dari kepailitan, seolah-olah perusahaan tidak pernah jatuh sakit. Walaupun Undang Undang Kepailitan memang memberi kurator opsi untuk melanjutkan usaha, nyatanya ini hanya bisa dilakukan dalam keadaan tertentu.
Dalam tulisan opini yang diterbitkan Kontan, Irvin S.T. Sihombing, anggota Asosiasi Kurator dan Pengurus Indonesia (AKPI), memberi contoh pemilik apartemen dan hotel Star Prima yang dinyatakan pailit di tahun 2021.
Kurator Star Prima memutuskan mengelola aset tersebut sampai mendapatkan pembeli, berdasarkan pertimbangan bahwa harga jual bisa tambah jatuh kalau dibiarkan tidak beroperasi dan pasokan listriknya diputus.
Di kasus Sritex, Irvin menulis bahwa kuratornya akan menghadapi tantangan tersendiri jika mereka mengambil keputusan untuk going concern. Memang benar, walaupun saya menghormati profesi hukum, apakah masuk akal untuk berharap bahwa kurator bisa tiba-tiba tahu bagaimana cara mengoperasikan pabrik tekstil?
Kalau tidak ada investor atau peminjam baru yang bersedia memberi dana segar, Sritex pasti akan terbelit beragam masalahnya, yang bersifat finansial, legal dan politik. Berpura-pura seolah-olah tidak ada masalah dan bisnis bisa berjalan seperti biasa, bukanlah solusinya.
📒 Quick Take: Sritex Tussle Turns Dangerous
14 January 2025
Sritex appointed new lawyers who may criminalize the administrators overseeing its liquidation.
The administrators said they cannot keep Sritex as a going concern because this would go against Indonesian law.
Sri Rejeki Isman (Sritex)’s tussle with the court-appointed administrators overseeing its liquidation has entered dangerous grounds, with the risk of boiling over to the streets.
The Indonesian textile company was declared bankrupt in October 2024 and the ruling was upheld by the Supreme Court two months later, but the founding Lukminto family has been desperately clinging to its 58-year legacy.
Sritex has blamed the team of four administrators for its malaise over the last few months, but the rhetoric ratcheted up a notch with threats to criminalize the administrators.
One of Sritex’s newly appointed lawyers, Patra M. Zen, told local media that they are preparing legal steps to defend their client’s interest, alleging without evidence that the administrators may “have done actions that can be classified as criminal action.”
A government official also barely staved off a planned protest in Jakarta by promising business continuity to a group claiming to represent Sritex’s workers.
As I wrote last week, however, keeping Sritex as a going concern is a mirage because no business can survive by continually selling goods below its costs. This suggests that Sritex is trying to keep a part of its production and workforce intact even though it’s not making money.
The administrators have been keeping quiet despite the public attacks from Sritex and the government official – until now.
In a press conference on Monday (13 January 2025), one of the administrators, Denny Ardiansyah, said that his team has been pressured not to carry out layoffs, but they also cannot go against the law because continuing Sritex’s business isn’t an appropriate solution that can be accounted for.
The going concern option could be taken if it is aimed at increasing or maintaining the liquidation value of the borrower’s assets, but Sritex has been incurring “a very big loss” while the management is unwilling to provide the data requested by the administrators, according to Ardiansyah.
Rebutting Sritex’s accusation that its bankrupt status had disrupted the flow of goods, Ardiansyah showed to reporters a video of a truck entering and exiting its factory at night. The borrower has been operating “illegally” since the court issued the bankruptcy ruling, “as if the bankruptcy never happened”, he said.
The administrators received claims totalling IDR 32.6 trillion (USD 2 billion) against Sritex, Ardiansyah said, noting that the Lukminto family filed IDR 1.2 trillion (USD 73.8 million) of claims via 11 affiliated companies. Ardiansyah also announced that the administrators are seeking legal protection from President Prabowo Subianto so they can carry out their duty.
Even though the administrators have been painted as the bogeyman who’s bringing down Sritex, they are actually operating under significant personal and professional risks that should be defused before the tension goes out of control.
BAHASA INDONESIA VERSION
Quick Take: Kemelut Sritex Masuk Babak Bahaya
Pertikaian antara Sri Rejeki Isman (Sritex) dan kurator yang ditunjuk pengadilan untuk membereskan asetnya memasuki babak berbahaya, dengan resiko yang bisa tumpah ke jalan.
Perusahaan tekstil tersebut dinyatakan pailit di bulan Oktober 2024 dan keputusan pengadilan diperkuat Mahkamah Agung dua bulan kemudian, namun keluarga Lukminto bersikukuh enggan melepaskan sejarahnya yang sudah berdiri 58 tahun.
Dalam beberapa bulan ini Sritex menuding tim yang berisi empat kurator itu sebagai biang kesulitannya, tapi retorika tersebut naik pangkat sekarang karena manajemen bahkan berniat mempidanakan kurator.
Salah satu pengacara baru Sritex, Patra M. Zen, megutarakan pada media bahwa mereka sedang mempersiapkan langkah hukum untuk membela kepentingan kliennya. Dia menuduh tanpa bukti bahwa para kurator “telah melakukan perbuatan-perbuatan yang dapat diklasifikasikan sebagai perbuatan pidana.”
Pejabat pemerintah juga mencegah unjuk rasa di Jakarta dengan menjanjikan keberlangsungan usaha ke grup yang mengklaim bahwa mereka mewakili pekerja Sritex.
Saya sudah menulis minggu lalu bahwa upaya “going concern” Sritex hanyalah fatamorgana, karena tidak ada bisnis yang bisa bertahan dengan terus-terusan menjual barang di bawah beban pokok. Ini mencerminkan bahwa Sritex berupaya menjaga sebagian produksi dan tenaga kerjanya walaupun bisnisnya merugi.
Para kurator memilih diam saja walaupun diserang Sritex dan pejabat pemerintah tersebut, tapi hanya sampai titik ini.
Dalam konferensi pers yang digelar hari Senin (13 Januari 2025), salah satu kurator, Denny Ardiansyah, mengatakan bahwa timnya didesak untuk tidak PHK, tapi mereka juga tidak bisa melanggar Undang Undang karena melangsungkan bisnis Sritex bukanlah solusi yang tepat dan bisa dipertanggungjawabkan.
Opsi going concern bisa diambil kalau bertujuan untuk meningkatkan atau mempertahankan harta pailit, namun nyatanya Sritex mengalami kerugian yang “sangat besar sekali” sementara debitur belum kooperatif untuk memberikan data yang diminta kurator, kata Denny.
Menjawab dalih Sritex bahwa status pailitnya mengganggu arus barang, Denny memperlihatkan kepada wartawan video yang merekam truk sedang keluar masuk pabrik pada malam hari. Dari sejak dinyatakan pailit, debitur melakukan aksi “ilegal” dengan masih tetap menjalankan perusahaannya “seolah-olah tidak terjadi kepailitan”, tutur Denny.
Total tagihan utang Sritex yang telah diterima kurator mencapai IDR 32,6 triliun (USD 2 miliar), dan keluarga Lukminto dicatat mendaftarkan tagihan sebesar IDR 1,2 triliun (USD 73,8 juta) lewat 11 perusahaan afiliasinya. Denny menambahkan bahwa tim kurator meminta perlindungan hukum dari Presiden Prabowo Subianto agar mereka bisa menjalankan tugasnya.
Walaupun para kurator selama ini digambarkan sebagai momok yang menjatuhkan Sritex, sebenarnya mereka bertugas dengan dibayangi resiko pribadi dan profesional yang tidak ringan. Resiko ini seharusnya diredakan sebelum ketegangan lepas kendali.
📒 Quick Take: Sritex’s Mysterious Job Numbers
15 January 2025
Sritex trumpeted the size of its workforce as a reason why it should continue its operations, but the job numbers keep changing.
The team of administrators handling Sritex’s liquidation said this week that they still did not have the exact employment data.
How many workers does Indonesia’s Sritex Group have?
It’s a simple question, but the numbers keep changing depending on who’s speaking. When Sri Rejeki Isman (Sritex) – the publicly listed flagship textile company – and three of its subsidiaries were declared bankrupt by a local court last year, the management trumpeted the size of its workforce as a reason why it should continue its operations.
Sritex directly employed 14,112 workers and this would expand to 50,000 at the group level, the management said on 26 October 2024, adding that the survival of “uncountable” small and medium-sized businesses also depended on it.
Several officials latched on to this 50,000 figure and announced that the government had secured a commitment from Sritex’s management that there would be no layoffs.
Yet, the team of court-appointed administrators handling Sritex’s liquidation said on 13 January 2025 that they still did not have the exact employment data because the borrower has been uncooperative.
What they know is that based on the data from the national employees social security agency (BPJS Ketenagakerjaan), Sritex and the three units – Sinar Pantja Djaja, Bitratex Industries and Primayudha Mandirijaya – had 11,271 workers.
The administrators also told reporters that they were blocked from getting documentation on Sritex’s stocks of raw materials and products, which was denied by the company.
When the administrators managed to check the latest stocks at Bitratex, they discovered that the abundant raw materials at its factory exceeded those of its parent. This contradicts Sritex’s claim that its bankrupt status had prevented it from taking in raw materials.
A meeting with Sritex’s creditors to verify their claims was delayed by a week to 21 January 2025, as the administrators said there is a lot of missing information.
As I wrote back in October 2024, the calculations on how to slice and dice the pie would depend on the size of preferred claims, particularly wages and other payments owed to workers. In short, the administrators cannot distribute any proceeds from liquidating Sritex’s assets to creditors without getting the jobs data first.
In fact, Bitratex’s workers have reportedly asked the administrators to terminate them so they can file social security claims and search for new jobs. Many workers at the Sritex unit were already laid off or furloughed since 2022, even before the bankruptcy ruling, one of the workers who’s a labour union leader, Nanang Setiyono, told reporters.
Sritex’s latest financials also showed that it has been reducing payments to workers. The company reported USD 27.2 million in payments of salaries and employee benefits for the nine months ended 30 September 2024, lower than USD 34.3 million a year earlier.
Despite these cuts, Sritex still incurred a net operating cash outflow of USD 7.1 million as it received less cash from customers while having to maintain high payments to suppliers.
I’ve written multiple times that Sritex has been internally bleeding and cannot continue as a going concern. One of the administrators, Denny Ardiansyah, revealed that in a meeting with Sritex’s representatives in late 2024, the independent director, Regina Lestari Busono, acknowledged that the company would have continued making losses.
Sritex’s limited working capital was also discussed at the meeting, Ardiansyah said, adding that there was a disagreement between Busono – a former auditor who also served as the head of commercial banking at Bank QNB Indonesia – and Sritex Finance Director Welly Salam.
If the government wants to save the crew of a sinking ship, it should know the exact number of people on board.
BAHASA INDONESIA VERSION
Quick Take: Sritex dan Misteri Data Pekerja
Berapa jumlah pekerja Grup Sritex?
Ini pertanyaaan yang sederhana, tapi angkanya selalu berubah tergantung siapa yang berbicara. Ketika Sri Rejeki Isman (Sritex) – perusahaan tekstil utama yang tercatat di bursa – dan tiga anak usahanya dinyatakan pailit tahun lalu, manajemen menggaungkan tenaga kerjanya sebagai alasan kenapa bisnisnya harus tetap berjalan.
Sritex mempekerjakan 14,112 karyawan secara langsung dan angka ini bertambah ke 50,000 di tingkat grup, kata manajemen pada tanggal 26 Oktober 2024. Dan “tak terhitung” bisnis kecil dan menengah lain yang keberlangsungan usahanya tergantung pada Sritex, tambahnya.
Angka 50,000 ini langsung nempel ke beberapa pejabat, yang mengumumkan bahwa pemerintah sudah mendapat komitmen dari manajemen bahwa tidak akan ada PHK di Sritex.
Namun, tim kurator yang ditunjuk pengadilan untuk membereskan harta Sritex mengatakan pada tanggal 13 Januari 2025 bahwa mereka belum mendapatkan jumlah pasti karyawan yang terdaftar karena debitur tidak kooperatif.
Yang mereka tahu berdasarkan data dari BPJS Ketenagakerjaan, Sritex dan tiga anak usahanya – Sinar Pantja Djaja, Bitratex Industries dan Primayudha Mandirijaya – mempekerjakan 11,271 karyawan.
Para kurator juga memberitahu wartawan bahwa mereka dihalang-halangi dan tidak diperbolehkan mengambil dokumentasi stok bahan baku dan hasil produksi Sritex, tapi ini disangkal oleh perusahaan.
Ketika kurator mengecek stok di Bitratex, mereka menemukan banyak sekali bahan baku di pabriknya, melampaui jumlah di induk usahanya. Ini bertolak belakang dengan pernyataan Sritex bahwa status pailitnya telah mengganggu penerimaan bahan baku.
Kurator meminta agar rapat verifikasi dengan kreditur ditunda satu minggu ke 21 Januari 2025 karena masih banyak informasi yang perlu dilengkapi.
Saya sudah menulis pada bulan Oktober 2024 bahwa perhitungan pembagian kue itu tergantung pada jumlah tagihan preferen, terutama gaji dan tunggakan lain ke para pekerja. Secara singkat, kurator tidak bisa mendistribusikan hasil penjualan aset Sritex ke kreditur tanpa mendapatkan data karyawan terlebih dahulu.
Justru pekerja Bitratex diberitakan memilih di-PHK oleh kurator supaya mereka bisa mengajukan klaim BPJS Ketenagakerjaan dan mencari pekerjaan lain. Banyak karyawan di anak usaha Sritex tersebut yang sudah dipangkas atau dirumahkan sejak 2022, bahkan sebelum putusan pailit, kata salah satu pekerja yang merangkap ketua serikat buruh, Nanang Setiyono, pada wartawan.
Laporan keuangan terbaru Sritex juga menunjukkan bahwa perusahaan sudah beberapa lama ini mengurangi pembayaran untuk karyawan. Sritex melaporkan pembayaran gaji dan imbalan kerja karyawan sebesar USD 27,2 juta untuk periode sembilan bulan yang berakhir pada 30 September 2024, lebih rendah dari USD 34,3 juta satu tahun yang lalu.
Bahkan setelah pemotongan ini, Sritex masih mencatat penggunaan kas neto untuk aktivitas operasi sebesar USD 7,1 juta, karena penerimaan kas dari pelanggan menurun sementara pembayaran kepada pemasok tetap tinggi.
Saya sudah menulis berulang kali bahwa Sritex berdarah-darah secara internal dan bisnisnya tidak bisa terus berjalan. Salah satu kurator, Denny Ardiansyah, mengungkapkan bahwa dalam rapat dengan perwakilan Sritex akhir tahun lalu, direktur independen Regina Lestari Busono menyatakan bahwa perusahaan memang akan terus merugi.
Modal kerja Sritex yang sangat terbatas juga dibahas dalam pertemuan tersebut, kata Denny, sambil menambahkan bahwa kala itu sempat terjadi perdebatan antara Ibu Regina – seorang bekas auditor yang juga pernah menjabat sebagai kepala commercial banking di Bank QNB Indonesia – dengan direktur keuangan Sritex Welly Salam.
Apabila pemerintah berniat menyelamatkan awak kapal yang sedang tenggelam, sebaiknya tahu persis jumlah orang yang berada di kapal tersebut.
📒 Quick Take: Indonesia’s Bad Apples
23 January 2025
Sritex and eFishery dealt a blow to investor trust in Indonesian high-yield bonds and startups, respectively.
Investors are also growing more concerned about Indonesia’s policy changes.
There’s a saying in Indonesia: “Karena nila setitik rusak susu sebelanga”. An entire pot of milk ends up spoilt by one drop of dye.
The implosion of Sri Rejeki Isman (Sritex) dealt a blow to investor trust in Indonesian high-yield bonds and affected appetite for new issuances. I’ve written about the textile company’s myriad of issues, ranging from undisclosed debt and related party transactions to questionable inventories and elevated margins.
I also flagged that Sritex’s job numbers keep changing even though its workforce is supposed to be the key reason for its continued existence. On Tuesday (21 January 2025), Sritex President Director Iwan Kurniawan Lukminto finally attended a court hearing and asked the judge to keep it as a going concern, instead of letting creditors cast a vote.
It’s unclear if the judge will entertain Lukminto’s request and some creditors have told the court-appointed administrators that they would like a comprehensive audit of Sritex’s business before making any decision. This reflects their lack of trust in Sritex’s books, which is hardly surprising.
Contrary to what a government official said, Sritex is not and should not be “the face” of Indonesia’s textile sector. There are companies that seek to upgrade their machineries or invest in new ones to move up the value chain, but they struggle to get loans because some banks have been traumatized by Sritex. If the government is serious about saving the textile industry, perhaps it should consider redirecting capital to more deserving businesses that are trying to do the right thing.
It’s also been a bad time for Indonesia’s startup community, which was rocked by the scandal engulfing eFishery. The fish feed unicorn’s top management inflated its revenue for the first nine months of 2024 by nearly five-fold and manipulated its bottom line to appear profitable despite massive losses, according to DealStreetAsia.
The publication also reported that eFishery’s management had kept two sets of accounting records since at least 2018 – one for selected company leadership and another for external parties including shareholders, banks and auditors.
A friend in the venture capital (VC) circle said there’s been a huge pullback in funding for Indonesian startups because “no one trusts the corporate governance” there anymore. Some VC funds even opted to return money to their investors because they decided it wasn’t worth the risk.
A few bad apples shouldn’t taint the entire basket, but these funds would rather be safe than sorry, especially if their reputation is at stake.
Investors are also growing more concerned about Indonesia’s policy changes, including the president’s last-minute decision to water down a value-added tax hike that was about to be rolled out.
Indonesia’s move to force natural resource firms to keep all export proceeds onshore for at least a year is another surprise for investors. A credit friend who tracks coal miners said that assuming these export-reliant companies have to park most of their revenue for one year, then they might be “cash flow negative on day one” if they couldn’t cover their bills.
This new requirement is aimed at reducing the volatility of the rupiah, which has crossed a key psychological level of 16,000 per dollar. But as my first friend pointed out, Indonesia has only been able to attract short-term portfolio flows so far and the erosion of investor confidence is the main cause of currency volatility. In short, Indonesia’s attempt to safeguard its currency might actually backfire if investors see it as a sign of erratic policy-making.
Indonesia has long been touted as a growing powerhouse in Southeast Asia, but other countries in the region, such as Vietnam, are giving it a run for its money.
In December 2024, US chipmaking giant Nvidia signed an agreement with the Vietnamese government to build artificial intelligence research and data centers in the country. This kind of stickier investment is precisely what Indonesia favours over hot portfolio money, but it’s underpinned by trust.
Trust is the most important currency – and Indonesia has its work cut out to regain it.
📒 Quick Take: Indonesia’s Wave of Layoffs
7 February 2025
Indonesia is facing a wave of layoffs in its textile and startup sectors.
Startups are experiencing a funding crunch due to the ripple effect from eFishery’s scandal.
Indonesia is facing a wave of layoffs in its textile and startup sectors, posing a risk to its economy that’s already growing at the slowest pace in three years.
An analyst at the Parliamentary Analysis Center of the House of Representatives (DPR), Hartini Retnaningsih, projected that at least 280,000 workers could be laid off by 60 textile companies this year, state news agency Antara reported. This would be more than triple the 77,965 layoffs recorded by the Ministry of Manpower in 2024.
The drivers for the potential layoffs include a value-added tax hike, reduced government subsidies, and higher premiums for the national health insurance program, according to Antara.
The health insurance scheme – which covers 219 million active policy holders – was estimated to run a IDR 20 trillion (USD 1.2 billion) deficit last year, piling pressure on its manager, BPJS Kesehatan, to increase premiums.
The rising costs couldn’t have come at a worse time for workers who are losing their jobs in the beleaguered textile industry. The poster boy of Indonesia’s textile crisis, Sri Rejeki Isman (Sritex), was declared bankrupt and the court-appointed administrators have accepted IDR 29.8 trillion (USD 1.8 billion) of claims from creditors.
Sritex’s management said it will prepare a proposal for its business continuity, but the administrators requested an independent audit to determine the feasibility. One of the administrators, Denny Ardiansyah, told reporters that Sritex’s independent director was of the view that the company would incur more losses and limited working capital if it were kept running.
In the startup sector, embattled aquaculture company eFishery has terminated more employees, after laying off around 100 workers in January, Kompas reported on Thursday (6 February). In a few weeks, eFishery’s shareholders are set to vote whether to wind down, restructure, or sell the company entirely or partially, according to Bloomberg.
As I wrote last week, the potential scenarios ahead for eFishery are a restructuring, liquidation, and enforcement against the perpetrators of the alleged fraud. A sale will likely be difficult because of eFishery’s limited assets and tarnished reputation, unless the potential buyers are bulletproofed from any further stinker.
I was expecting more layoffs after the Muslim holidays due to the PR risks, but eFishery’s management probably had to act sooner rather than later to stem the losses. The appointment of FTI Consulting—which investigated the alleged fraud—to temporarily run eFishery also sent a signal that shareholders are roping in an independent third party to choose the best path objectively.
The fact remains, however, that eFishery’s shareholders are staring at a dwindling pool of recovery, as the startup may have to pay severance and Hari Raya Allowance (Tunjangan Hari Raya) to the affected workers. It’s also uncertain whether they can claw back money from eFishery’s founder Gibran Huzaifah and his accomplices.
For now, the damage has been done. The eFishery scandal has delivered another blow to investor sentiment in Southeast Asia, where the startup ecosystem has been braving a multi-year funding drought, CNBC reported.
The founders of another Indonesian startup, Ula, are winding it down and offering to return around 30% of its total capital to investors, DealStreetAsia reported. The “warung-tech” company’s backers were given the option to either redeem their investments or roll them into founder Nipun Mehra’s upcoming venture, according to the publication.
If layoffs in the startup and textile sectors were to accelerate, the affected workers and their families would likely tighten their belts. The aggregate numbers are unclear at this point, but weakening consumption may undermine the Central Bank’s efforts to stimulate growth by cutting interest rates.
At the end of the day, bread-and-butter issues can make or break an economy.