Indonesia will open more markets through numerous trade deals. It currently has signed trade deals with Pakistan, India, United States of America, Spain, Swiss, Tunisia, Bangladesh, Taiwan, New Zealand, and Morocco. The United States and the European Union are the main destinations for Indonesia’s textile exports. With such agreements in place Indonesia expects its exports of textile and textile products to increase three-fold.
The cooperation agreement with Japan has helped increase Indonesia’s exports. The country’s trade balance had experienced a surplus of $230 million throughout September 2018, a contrast to the previous month, which experienced a $1.02 billion deficit. The industry in Indonesia wants downstream products to be protected from the onslaught of imports.
Other aspects that need improvement include electricity tariffs, ease of distribution and quality of human resources. For Indonesia, trade agreements with partner countries can increase the export value and increase market share. Despite the export growth, Indonesia’s imports still exceed its exports.
Till now lack of market access has been a constraint for the textile industry. Meanwhile, textile products from neighboring countries, such as Vietnam, can enter with a zero per cent import duty.
At present, the market share of new domestic textile products is around 1.8 per cent while in Indonesia the textile industry has been integrated from upstream to downstream so that the potential for development is still large.