Textile exports exceed expectations
Indonesian exports of textile and textile products have
already reached the value of US$12.4 billion in 2017 exceeding
the Indonesian Textile Association (API)'s target of US$11.8
Indonesia's textile exports rose around 5% on a year-on-year
basis in 2017. This is a great performance because the country's
textile exports had been rather stagnant in the 2012-2016
period, and secondly global textile demand actually declined
According to data from API, Indonesian textile exports to
both the United States and Japan declined by 2% percent in 2017.
Meanwhile, demand from the European Union fell 3% and yet
this decrease was offset by rising textile demand in Southeast
Asia and the Middle East.
Another important factor is that, generally, Indonesia's
competitiveness has improved in the textile industry; hence it
can offer its textile products at more attractive prices on the
world market. Several years ago various textile factories were
moved from West Java and Banten to Central Java because minimum
wages rose too steeply in West Java and Banten. The Central
Java, on the other hand, still offers a relatively cheap
Meanwhile, the stable economy of Indonesia has attracted more
investment in Indonesia's textile sector. According to data from
Indonesia's Investment Coordinating Board (BKPM), a total of IDR
10.24 trillion (approx. US$ $759 million) was invested in
Indonesia's textile industry in the January-September 2017
period, much higher than the IDR 7.54 trillion that was invested
in the same period one year earlier.
Although demand from the United States fell, the world's top
economy remains the biggest market for Indonesian textiles.
About 36% of Indonesian textile shipments go to the United
States. On second place comes the Middle East (23%), followed by
the European Union (13%).
A concern for Indonesia's textile industry is that
competition from Vietnam is rising. Problematically, and unlike
Vietnam, Indonesia does not have a free trade agreement with the
European Union. Therefore, Indonesian textile exports to Europe
are subject to import duties in the range of 5%-20%, while
Vietnam can export its textile products to this region without
import duties. This makes Vietnam's products more competitive
and attractive for EU buyers.