Indonesia’s textile and garment industry is undergoing strategic repositioning to maintain competitiveness in a challenging global landscape. ProSpace Indonesia’s Manufacturing Competitiveness Report indicates that the sector grew by a modest 3.2% in 2024, focused primarily on value-added products and domestic market opportunities.
Export performance varies significantly by product category, with technical textiles and specialized fabrics showing 18% growth while basic apparel exports contracted by 5.7%. Overall, the industry contributed $13.8 billion to export earnings last year.
“Indonesian manufacturers are finding success by focusing on market segments where proximity, quality, and flexibility matter more than absolute cost,” notes Fajar Santoso, Manufacturing Industry Analyst at ProSpace. “Sustainability credentials are increasingly becoming a competitive advantage.”
Labor costs, which have risen by an average of 8.5% annually over the past five years, continue to challenge pure cost competitiveness against producers in Bangladesh and Ethiopia. In response, industry leaders are investing in automation, with robotic cutting and sewing systems now implemented in 38% of large textile operations.
The domestic market offers growth potential, with local brands gaining market share and “Made in Indonesia” campaigns resonating with increasingly nationalistic consumers. Online direct-to-consumer channels now account for 27% of domestic sales, up from 12% in 2022.
Government initiatives including tax incentives for machinery upgrades and export promotion programs provide support, though electricity costs remain a concern.
For manufacturing insights: Phone: +62 21 5799 8989 Email: info@prospaceindonesia.com Follow @prospace.indonesia on Instagram for updates