One of Indonesia's largest garment makers, PT Eratex Djaja, is to close a factory with the loss of 400 workers after running into financial problems, according to local media reports.

The vertically integrated firm, whose business runs from spinning through weaving and finishing to garment making, has struggled to secure a new loan after defaulting on debt payments, the newspaper Bisnis Indonesia said.

As a result, it is shuttering a factory at its main production facility in Probolinggo, East Java, where it employs 4,500 people on a 170,000 sq metre site.

The company specialises in bottoms, ranging from jeans to casual dress pants, but also makes jackets and woven shirts for customers including Levis', Uniqlo, Banana Republic and Esprit.

It has also been hit by falling demand from the US, EU and Japanese markets, which take 90% of its production but have been hit by lower sales during the economic downturn.