The textile industry in Indonesia is growing steadily. The country wants to become the number one in textile exports by overtaking China, which is shifting its economy from textiles to services. By 2030, Indonesia wants to raise its contribution to global textile exports from 1.8 to 5 per cent.

Domestic sales are forecast to increase by seven per cent this year, following a 10 per cent decline in 2012 to 2013. There is strong domestic demand for Indonesian textile products, despite competition from lower priced, high quality imported textile and textile products. Indonesia currently ranks ninth in global textiles exports. The industry, combining textiles, leather goods and footwear, is expected to contribute 10.7 per cent of non-oil and gas exports in 2014. Indonesia has expressed interest in joining the multilateral Trans-Pacific Partnership, which would open opportunities for higher Indonesian textile exports to Europe.

However, the industry faces tough competition from players in Southeast Asia that have lower production costs and cheaper labor. Vietnam, for example, has managed to carve out a 3.3 per cent share of global textiles and garments exports. Indonesia’s infrastructure costs are high compared to Vietnam and Cambodia. Electricity now accounts for up to 35 per cent of total production costs for textile companies.