Indonesia's textile exports rose by 5 per cent on a year-on-year basis in 2017 after being stagnant in the 2012-2016 period despite a decline in global textile demand in the year, according to the Indonesian Textile Association (API). Exports to the United States and Japan fell by 2 per cent each in 2017, while to the European Union (EU) fell by 3 per cent.
The United States still remains the biggest market for Indonesian textiles. About 36 per cent of Indonesian textile shipments go there. On second place comes the Middle East (23 per cent), followed by the EU (13 per cent).
Indonesia's competitiveness, in general, has improved in the textile sector which has attracted more investment because of the country’s stable economy, a leading portal monitoring the country’s economy reported.
Various textile factories were moved from West Java and Banten to Central Java several years ago because minimum wages rose too steeply in West Java and Banten. Central Java still offers a relatively cheap production environment.
Nearly $759 million was invested in Indonesia's textile industry in the January-September 2017 period, much higher than the figure in the same period a year earlier, according to statistics from the country’s Investment Coordinating Board (BKPM).
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 percent, 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.
(Source: Jakarta Globe And Indonesia Investment)