Indonesia’s Textile Challenges

Indonesia’s Textile Challenges

SHARE

The Indonesian government has set a target of 75 billion USD for the export market of textiles and garments to achieve by 2030. This means that the textile and garment industry alone would be contributing to 5 percent of the country’s global export value.

Historically and currently the textile and garment industry has been a constant and resourceful source of employment for Indonesia’s labour force. This industry proofs to be very labour intensive and Indonesia ranks among the top ten textiles producing nations within the world.

There are however several challenges to overcome before this goal set by the Indonesian government can become a reality. A huge investment in technology as well as infrastructure would be needed to ensure a steady import of raw materials and to remain ahead of other competitive Southeast Asian markets such as Cambodia, Myanmar and Vietnam. The weakening rupiah is also a concern for Indonesia’s textile industry because yarn, cotton, dyes and fabrics are mostly imported from abroad in USD. The depreciating currency makes imports more expensive and therefore causes financial turmoil for local textile companies.

Indonesia also poses no threat to China’s dominance in the textile industry. China controls about 35 percent of the global textile market, whereas Indonesia controls only about 2 percent. The rising minimum wages in China might just make manufacturing in the world’s second largest economy slightly more competitive while creating an opportunity for Indonesia to present itself as a more attractive production hub for global fashion brands. Rising labour, resource and energy costs has a negative effect worldwide on the textile industry and Indonesia needs to find more innovative ways to expand and develop business opportunities.