Indonesia’s textile sector hopes to be a beneficiary of the trade war between the US and China. The pay off could be a billion dollars or more. But cashing in on the seismic shift in global supply chains won’t be easy for the country’s textile makers. Indonesia is currently battling a slowing global demand for commodities. Indonesia saw exports slump for the tenth straight month in August. Indonesia seems to be lagging in terms of gains from trade diversion and from investments in the new supply chains despite its large labor force, competitive wages and ample land. Bureaucratic regulations, protective labor laws and high trade barriers are handicapping its draw. Indonesia has struggled in comparison to regional rivals in attracting companies wanting to shift out of China. Between June and August this year, 33 Chinese-listed companies announced plans to set up or expand production abroad, with 23 moving to Vietnam alone. The others shifted to Cambodia, India, Malaysia, Mexico, Serbia and Thailand. None moved to Indonesia.

Global firms are pivoting production out of China, which for decades was the world’s workshop. Companies are now scrambling to secure supply lines from other locations like Taiwan, Vietnam, and Bangladesh to skirt the tariffs on US-bound goods.