Visualised:Textiles and garments
This month's visualisation examines the context, opportunities and constraints to Indonesia's textile and garment industry re-emerging as a competitive, sustainable and high-value sector.
Presently, most textile and garment manufacturers in Indonesia are micro businesses. Yet it is large-scale industry that drives the bulk of production, exports and labour productivity.
Textile and garment industry characteristics
Indonesia's textile and garment competitiveness has been in steady decline for decades across multiple product categories.
Share of competitive Indonesian textile products
At the same time, other economies have become stronger competitors – most notably China and Vietnam – Indonesia's Southeast Asian peer.
Changing exports landscape for textiles and garments
Global textile trade has continued to grow over the past 30 years. Emerging markets present upstream opportunities in fibre and fabric production, while demand for finished garments remains strong in developed economies.
Growth of the textiles and garment industries
Opportunities for Indonesia
Fast fashion is set to remain a key driver of growth as demand for affordable, trend-driven products increases. Alongside this, the luxury segment—expanding in line with the overall market—offers a strategic chance to support Indonesia's 2045 vision of becoming a high-income economy.
To seize these opportunities, Indonesia's textile sector must lift its standards across three dimensions:
Quality
Premium design, durable materials, and consistent innovation build brand reputation and customer loyalty.
Supply
Flexible, fast, and well-coordinated supply chains allow quick adaptation to shifting market demand.
Sustainability
Green practices across the product lifecycle meet rising consumer expectations and global brand requirements.
A particularly promising niche is recycled polyester. Polyester dominates global fibre demand, and more than 100 major brands – including Adidas and H&M – have pledged to source recycled fibres, many at 100% levels.
Global fibre market
With 7.8 million tons of plastic waste generated each year and only 10–15% recycled, Indonesia can transform "rubbish into reward," reducing ocean leakage while building a high-value supply chain.
Ocean bound plastic fibre production
Constraints and potential pathways
Reviving Indonesia's textile and garment industries as competitive, high-value sectors will require tackling persistent constraints. With commitment to targeted reform, textiles can emerge as a competitive, high-value industry in Indonesia.
Labour
⚠️ CONSTRAINT
Wage uncertainty, restrictive rules, and outdated skills mismatch deter investment.
✓ PATHWAY
Modernise vocational training, align curricula with industry needs, and expand continuous upskilling.
Technology
⚠️ CONSTRAINT
Aging machinery and limited adoption of green tech and clean energy.
✓ PATHWAY
Mobilise finance for upgrades, adopt cleaner technologies, and foster innovation in production.
Finance
⚠️ CONSTRAINT
High borrowing costs and a high-risk perception restrict access to capital.
✓ PATHWAY
Deploy de-risking tools (credit guarantees, direct financing, green instruments) to attract investment.
Regulation
⚠️ CONSTRAINT
Complex licensing, lengthy procedures, and weak coordination discourage investors.
✓ PATHWAY
Streamline labour and licensing rules, strengthen circular economy coordination, and enable innovation.
Trade
⚠️ CONSTRAINT
Underused free trade deals and illegal imports undermine competitiveness.
✓ PATHWAY
Enforce fair competition, expand use of FTAs, improve ports/logistics, and cut input barriers.
Energy
⚠️ CONSTRAINT
Limited access to reliable clean electricity and cleaner heat sources.
✓ PATHWAY
Expand clean power access and support use of gas and biomass for industrial energy needs.