Jakarta. The government plans to establish a state-owned enterprise in the textile sector, in part to keep the operations of bankrupt textile manufacturer Sri Rejeki Isman, widely known as Sritex, running and to safeguard thousands of jobs, a senior official said on Monday.

State Secretary Minister Prasetyo Hadi said the proposed company is intended to ensure that Sritex’s economic activities continue despite the firm having been declared bankrupt and taken over by court-appointed administrators.

“Sritex must be saved so that its economic activities can continue, as it employs around 10,000 workers,” Prasetyo said at the State Palace.

He added that the company has played a significant role in the economy, producing textile and apparel products for both the domestic market and exports.

Sritex was declared bankrupt by a court after failing to meet its debt obligations to creditors. The company’s two owner brothers, Iwan Setiawan Lukminto and Iwan Kurniawan Lukminto, have been detained by the Attorney General’s Office on allegations of misusing more than Rp 1 trillion (about $59 million) in credit facilities from state-owned banks for personal purposes.

Prasetyo said the process of forming the state-owned textile company is ongoing and is expected to be completed in the near future. He did not specify whether the Sritex brand or its full range of assets would be incorporated into the new enterprise.

Once a dominant player in Indonesia’s textile industry, Sritex drew national attention in October 2023 when a court declared the company bankrupt. The manufacturer, which had operated for 58 years, officially ceased operations in March 2025, leaving thousands of workers unemployed after previous efforts to secure a government bailout failed.