Key Insights
The textile and apparel industry contributed 6.05 percent to Indonesia's non-oil and gas processing industry GDP in Q1 2023
Indonesia entered the top 10 list of largest textile and apparel exporters globally in 2022 with a value of USD 13.83 billion
The export value of Indonesia's textile and textile product (TPT) industry reached USD 11.6 billion in 2023 declining from the previous year due to global demand shifts
The textile and garment industry employs approximately 3.65 million people directly as of 2022
Approximately 58 percent of the workforce in the Indonesian garment sector are women
The textile industry accounted for absorbing 18.7 percent of the total manufacturing workforce in 2021
Indonesia imports 99 percent of its cotton needs primarily from the USA, Brazil, and Australia
Indonesia is the world's largest producer of rayon specifically Viscose Rayon with a capacity exceeding 800,000 tons per year
The utilization rate of the national textile industry dropped to 60 percent in late 2022 due to reduced order volumes
The Indonesian domestic apparel market size is projected to reach USD 22 billion by 2025
The modest fashion sector in Indonesia is ranked 3rd globally in terms of market breadth
E-commerce sales of fashion products in Indonesia grew by 20 percent year-on-year in 2022
The Textile and Clothing industry is one of the five priority sectors in the 'Making Indonesia 4.0' roadmap
In 2021 Foreign Direct Investment (FDI) in the textile sector reached USD 367 million
Domestic Investment (PMDN) in the textile industry stood at IDR 2.4 trillion in Q1 2022
Economic Contribution & Exports
The textile and apparel industry contributed 6.05 percent to Indonesia's non-oil and gas processing industry GDP in Q1 2023
Indonesia entered the top 10 list of largest textile and apparel exporters globally in 2022 with a value of USD 13.83 billion
The export value of Indonesia's textile and textile product (TPT) industry reached USD 11.6 billion in 2023 declining from the previous year due to global demand shifts
The United States remains the largest export destination for Indonesian knitted fabrics accounting for approximately 35 percent of total exports
Indonesia's textile industry exports to the European Union are targeted to increase to USD 4 billion annually pending the IE-CEPA agreement
The textile sector grew by 5.56 percent in 2019 prior to the pandemic shock illustrating its high volatility
Exports of Indonesian batik reached USD 53.3 million in 2020 despite pandemic restrictions
Japan is consistently among the top 3 importers of Indonesian ready-made garments taking nearly 10 percent of the share
The TPT (Textile and Textile Product) industry is one of the top 3 foreign exchange earners in the non-oil and gas manufacturing sector
In 2022 the export of yarn from Indonesia was valued at approximately USD 2.5 billion
Indonesia's textile exports to China surged by 15 percent in 2021 driven by the RCEP trade agreement dynamics
The footwear and textile sectors combined account for roughly 11 percent of Indonesia's total manufacturing exports
West Java province contributes nearly 40 percent of the national textile export value
The trade surplus in the textile sector narrowed by 12 percent in 2023 due to an influx of cheaper imported fabrics
Indonesia's man-made fiber exports reached 800,000 tons in volume during 2022
The value of woven fabric exports stood at USD 1.2 billion in the fiscal year 2022
Total exports of garments were recorded at USD 9 billion in 2019 before fluctuated in subsequent years
Indonesia supplies approximately 2 percent of the global textile market demand
The non-knitted apparel export segment grew by 8 percent year-on-year in 2022
Exports of specialized technical textiles remain low at under USD 100 million indicating a gap in high-value production
Interpretation
Indonesia's textile industry, contributing 6.05 percent to non oil and gas processing GDP and climbing into the global top ten with about USD 13.8 billion in exports before easing to USD 11.6 billion in 2023, punches above its roughly 2 percent share of world demand thanks to strong yarn and man made fiber shipments and a West Java hub that supplies nearly 40 percent of exports, yet heavy reliance on markets such as the United States which takes about 35 percent of knitted fabric exports, a 12 percent narrowing of the trade surplus, post pandemic volatility and technical textile exports under USD 100 million show the sector is capable but vulnerable unless it diversifies products and moves up the value chain.
Investment & Regulations
The Textile and Clothing industry is one of the five priority sectors in the 'Making Indonesia 4.0' roadmap
In 2021 Foreign Direct Investment (FDI) in the textile sector reached USD 367 million
Domestic Investment (PMDN) in the textile industry stood at IDR 2.4 trillion in Q1 2022
The government implemented Safeguard Measures (BMTP) on imported fabrics ranging from IDR 1,318 to IDR 9,521 per meter to protect local industry in 2020
The Machine Restructuring Program offers a 10 percent reimbursement on the price of new foreign machinery and 25 percent for local machinery
Indonesia aims to be in the top 5 global textile producers by 2030 under the Industry 4.0 masterplan
The Omnibus Law on Job Creation reduced severance pay caps which impacted the labor-intensive textile sector's cost structure
Import duties on raw cotton are currently set at 0 percent to support the spinning industry
The government provided a subsidized gas price of USD 6 per MMBTU for the textile industry to enhance competitiveness
In 2023 the Ministry of Trade tightened regulations on illegal thrift clothing imports under Regulation No 40/2022
Investment realization in the textile industry fell by 14 percent in 2023 compared to the previous year due to global uncertainty
Indonesia has 15 bonded logistic centers (PLB) specifically dedicated to textiles and cotton to reduce logistics costs
The 30 percent local content requirement (TKDN) is being pushed for government uniform procurement
Indonesia has Free Trade Agreements (FTAs) with Japan and Australia that eliminate tariffs on most textile products
The government allocated IDR 4.5 billion for the machine restructuring program fund in 2023
Strict regulations on wastewater standards (Baku Mutu Air Limbah) require textile firms to invest roughly 15-20 percent of capex in WWTP
Bank Indonesia offers special credit schemes for export-oriented textile MSMEs
The "Bangga Buatan Indonesia" (Proud of Indonesian Products) campaign aims to increase local textile market share by 20 percent
Foreign ownership in textile manufacturing is allowed up to 100 percent under the Positive Investment List
The Green Industry Standard (SIH) certification has been adopted by over 50 major textile companies as of 2022
Interpretation
Indonesia is ambitiously weaving protection, subsidies and trade liberalization into an Industry 4.0 blueprint—offering safeguard tariffs, zero cotton duties, subsidized gas, machine reimbursements, FTAs and full foreign ownership to chase a top-five global textile spot by 2030, yet heavy compliance costs from wastewater standards, local-content rules and labor-law changes, together with global uncertainty, have cooled investment despite branding campaigns and MSME support.
Market Size & Consumer Trends
The Indonesian domestic apparel market size is projected to reach USD 22 billion by 2025
The modest fashion sector in Indonesia is ranked 3rd globally in terms of market breadth
E-commerce sales of fashion products in Indonesia grew by 20 percent year-on-year in 2022
Muslim fashion consumption in Indonesia is valued at approximately USD 6 billion annually
The compounded annual growth rate (CAGR) of the Indonesia Textile Manufacturing Market is expected to be 5.54 percent from 2023 to 2028
20 percent of Indonesian consumers purchase fashion items via TikTok Shop indicating a shift in retail channels
Demand for sustainable and eco-friendly fabrics in the domestic market has risen by 12 percent since 2020
The children's wear segment in Indonesia accounts for 15 percent of the total apparel market revenue
Batik sales account for 10-15 percent of the total domestic textile market consumption
Local fashion brands have captured 30 percent of the mid-market segment previously dominated by international fast fashion
45 percent of Indonesian online shoppers cite 'price' as the primary factor for textile purchases over 'quality'
The demand for home textiles (bedding/curtains) grew by 7 percent in 2022 driven by the post-pandemic housing recovery
Indonesia consumes 1.6 million tons of textile raw materials annually
The 'Thrifting' (second-hand imported clothing) market was estimated to be worth millions of dollars before the 2023 crackdown
65 percent of textile sales in Tanah Abang market (Southeast Asia's largest textile market) are now wholesale for regional distribution
Consumer spending on clothing and footwear in Indonesia is predicted to reach IDR 390 trillion by 2024
The sportswear market in Indonesia is growing at 9 percent annually linked to increasing health awareness
Zalora reports that modest wear is the highest performing category on their Indonesian platform contributing significantly to revenue
Java island accounts for 70 percent of total national textile consumption
Revenue in the fabrics segment amounts to USD 3.8 billion in 2023
Interpretation
Think of Indonesia's textile industry as a fast-moving loom weaving billion-dollar opportunities: the market is set to reach USD 22 billion by 2025 while modest and Muslim fashion, ranked third globally and valued at about USD 6 billion, drive demand as local brands capture 30 percent of the mid-market and e-commerce plus TikTok Shop, used by 20 percent of shoppers, rewires retail after a 20 percent online sales jump in 2022; rising interest in sustainable fabrics up 12 percent, strong segments such as sportswear growing 9 percent, children's wear accounting for 15 percent of revenue and a 7 percent rebound in home textiles exist alongside persistent price sensitivity at 45 percent and industrial-scale inputs of 1.6 million tons of raw materials and USD 3.8 billion in fabrics revenue, all anchored in Java and wholesale hubs even as thrifting faces regulatory pressure and a steady 5.54 percent CAGR reshapes the sector.
Production & Technology
Indonesia imports 99 percent of its cotton needs primarily from the USA, Brazil, and Australia
Indonesia is the world's largest producer of rayon specifically Viscose Rayon with a capacity exceeding 800,000 tons per year
The utilization rate of the national textile industry dropped to 60 percent in late 2022 due to reduced order volumes
Nearly 70 percent of textile machinery in Indonesia is over 20 years old requiring urgent restructuring
Indonesia produced 1.45 million metric tons of polyester fiber in 2021
The Citarum River revitalization program aims to ensure 100 percent of textile factories along the river treat waste-water by 2025
Domestic cotton production provides less than 0.5 percent of the industry's total supply recorded at roughly 500 tons annually
Indonesia's annual yarn production capacity stands at approximately 2.9 million tons
There are over 2,600 large and medium-scale textile companies operating in Indonesia
The adoption of Industry 4.0 IoT technologies in textile factories is currently below 15 percent penetration
Energy costs account for roughly 25 to 30 percent of the total production cost in Indonesia's upstream textile industry
Indonesia produces approximately 450 million pairs of shoes annually many of which utilize local textile components
Asia Pacific Rayon (APR) in Riau operates the largest integrated viscose-rayon production line in Southeast Asia
Digital printing textile production in Indonesia is growing at a CAGR of 17 percent
Indonesia's production of medical textiles (PPE) surged by 1000 percent during 2020 reaching 3.5 billion pieces annually
Water consumption for dyeing 1kg of fabric in older Indonesian factories averages 100-150 liters
80 percent of the raw material for the synthetic fiber industry (PTA/MEG) is produced locally in Indonesia
The installed production capacity of the garment sector is approximately 2.2 million tons per year
Solar panel adoption in textile factories has reached 50 MWp capacity installed as of 2023
Productivity of Indonesian spindles is approximately 92 percent of the international standard benchmark
Interpretation
The Indonesian textile industry is a study in contrasts, simultaneously the world’s largest viscose rayon producer and a maker of millions of yarns, garments, polyester fibers and shoes, yet it meets less than half a percent of its cotton needs at home while importing 99 percent, runs mostly on two-decade-old machinery and operates at just 60 percent capacity with Industry 4.0 adoption below 15 percent, faces hefty energy and water bills even as the Citarum revitalization forces wastewater compliance by 2025, and despite strengths like 80 percent local PTA/MEG supply, rapid digital printing growth, rising solar adoption and a dramatic PPE surge, it urgently needs investment and restructuring to turn scale into sustainable competitiveness.
Workforce & Employment
The textile and garment industry employs approximately 3.65 million people directly as of 2022
Approximately 58 percent of the workforce in the Indonesian garment sector are women
The textile industry accounted for absorbing 18.7 percent of the total manufacturing workforce in 2021
Massive layoffs occurred in 2023 where the Indonesian Textile Association (API) reported over 60,000 job cuts
Central Java has become a new center for labor-intensive garment factories due to a minimum wage that is roughly 40 percent lower than West Java/Jakarta
Informal employment in the batik and small-scale textile heritage sector is estimated at 1 million workers
The average monthly wage for a garment worker in West Java is approximately IDR 2.4 million to IDR 4.5 million depending on the district
Labor productivity in the textile sector increased by only 2 percent annually between 2015 and 2020 highlighting a need for upskilling
Around 30 percent of textile workers are employed on a contract basis rather than permanent status
The Sukabumi and Bandung districts combined host over 400,000 textile workers
Enrollment in textile engineering vocational schools (STTT) has seen a 10 percent increase to meet Make Indonesia 4.0 demands
Labor costs in Indonesia are 0.95 USD per hour which is higher than Bangladesh but lower than China
Membership in labor unions within the export-oriented garment sector is estimated at 35 percent
During the COVID-19 pandemic nearly 2 million textile workers were temporarily furloughed
The Solo region employs over 50,000 workers specifically in the traditional batik and printing sector
Turnover rates in the garment sector average around 8 to 10 percent annually
Better Work Indonesia covers over 200 factories employing more than 350,000 workers to monitor compliance
The gender pay gap in the manufacturing sector including textiles is estimated at 18 percent
Child labor incidence in the export-oriented textile sector is near zero due to strict compliance audits
80 percent of workers in the garment sector are between the ages of 18 and 35
Interpretation
Indonesia’s textile industry, which directly employs about 3.65 million people and is roughly 58 percent female and 80 percent young, is spinning threads and tensions alike, supplying nearly one fifth of manufacturing jobs while relying on low pay of about IDR 2.4 to 4.5 million in West Java and roughly 0.95 USD per hour, seeing a 40 percent wage-driven shift to Central Java, housing one million informal batik workers and 30 percent contract staff, suffering only 2 percent annual productivity growth and an 18 percent gender pay gap plus over 60,000 layoffs in 2023 after nearly 2 million pandemic furloughs, so rising vocational enrollment, modest union presence and stronger compliance must quickly translate into real upskilling and stable jobs or competitiveness will keep coming at workers’ expense.
Sources & References
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