The rise in low-cost Chinese imports and disruptions in global supply chains are posing significant challenges to the Indonesian textile industry. Indonesia’s market share in thedomestic textile industry is dwindling as exports to the global markets are on a decline, notes ShintaKamdani, the General Chair, Indonesian Employers’ Association. These issues are being further exacerbated by the falling value of the rupiah, she adds.
As per a report, Indonesia closed down around 21 textile factories in 2023. This resulted in the loss of 150,000 jobs at large and medium-sized facilities. An additional 31 factories are at risk of shutting down. Redma Gita Wirawasta, Chairman, Indonesian Fibre and Filament Yarn Producers Association (APsyFI), states, textile factories in the country are currently operating at 72 percent capacity due to the industry's decline.
Wirawasta attributes the increase in textile imports from China to factors such as the COVID-19 pandemic and the ASEAN-China Free Trade Agreement. The ongoing Ukraine conflict has further disrupted the market, she says.
Nandi Herdiaman, Chairman, IkatanPengusahaKonveksiBerkarya (IPKB), affirms,60 percent of small and medium-sized enterprises in the sector have ceased operations. Those still operating are running well below capacity, amid fears that imported products are dominating both offline and online domestic markets.
Both APsyFI and the Indonesian Employers’ Association have also raised concerns over the depreciation of the rupiah against the US dollar, which is worsening the industry's challenges.
Despite these setbacks, Indonesia’s viscose fiber industry has shown promising growth, driven by changing global consumption patterns and significant investments in domestic production capacity. In early 2024, efforts were made to strengthen bilateral trade ties between Indonesia and Bangladesh, particularly in the apparel and textile sectors, reflecting current regional economic dynamics.
