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Indonesian textile industry grows 20 per cent

The textile and apparel industry in Indonesia grew 20.71 per cent in the second quarter of 2019.However, Indonesia’s share in the global textile market is around 1.6 per cent. In comparison, China’s share is 31.8 per cent; Vietnam has a 4.59 per cent share and Bangladesh 4.72 per cent share.

The poor growth of exports of Indonesian textiles and textile products is due to the high cost of local production, facilities and trade policies that favor imports, and a lack of long-term planning which has deterred investment. The performance of the Indonesian textile industry sector continued to decline in the last 10 years. The trade war was an opportunity for Indonesian textiles to take over the Chinese market. But the competitiveness of its products is still weak. Costs of energy, logistics, and labor are the inhibiting components. Yarn, fabric, and garment products from China are expected to flood Indonesia because of the trade war. It will lead to an oversupply of domestic textiles, making the price drop and hit Indonesian textile companies. This market is an easy target for China since Indonesia does not apply trade barriers, unlike Brazil or Turkey. Indonesia remains an open market, and the most affected will be companies that rely on the domestic market.