Indonesia: Still Strong

he Republic of Indonesia – encompassing 17,508 islands and extending across Southeast
Asia and Oceania – has a population of some 240.3 million people, making it the fourth most
populous nation in the world. The country has a well-established, vertically integrated textile
industry that includes nearly every production stage. The World Trade Organization’s (WTO’s) most
recent Trade Policy Review of Indonesia reports that as of 2007, there were more than 1.2 million
people employed in the textile industry in more than 4,500 manufacturing facilities.

Indonesian Textile Association Vice Chairman Ade Sudrajat says that although textiles make
up less than 4 percent of the country’s gross domestic product, they play a big part in the
manufacturing sector. Textiles contribute more to Indonesia’s economy that any other non-oil
sector, accounting for 10 percent of the country’s total exports. Indonesia is one of the leading
textile and apparel exporters in the Association of Southeast Asian Nations (ASEAN) region. The WTO
reports the country ranks first among ASEAN countries in numbers of spindles and looms, and its
production capacity ranks fourth worldwide.


According to the WTO’s 2008 International Trade Statistics, the country’s apparel exports in
2007 were valued at US$5.9 billion, representing a 1.7-percent share in world exports; and its
textile exports were valued at US$3.83 billion, accounting for a 1.6-percent share in world
exports. Indonesia exports a large share of its textiles to the United States: According to the US
Department of Commerce, International Trade Administration, Office of Textiles and Apparel’s June
5, 2009, Major Shippers Report, Indonesia accounted for 4.7 percent in terms of dollars and 3.2
percent in square-meter equivalents of total textile and apparel imports into the United States in
the year ended in April 2009.


The Jakarta-based Indonesian Synthetic Fiber Makers Association, which represents 14
man-made fiber manufacturers in the country, reports that Indonesia is one of the world’s 10
largest man-made fiber manufacturers, with total manufacturing capacities of 500,000 tons of
polyester staple fiber; 825,000 tons of polyester filament yarn; and 30,000 tons of nylon filament

According to the 2007 International Textile Machinery Shipment Statistics report of the
Switzerland-based International Textile Manufacturers Federation (ITMF), 2007 saw record-high
shipments of short-staple spindles, with Asia being the main recipient and Indonesia receiving
429,000 or 3 percent of the spindle shipments. Shipments of shuttleless looms also were high, with
most being sent to Asia and Indonesia importing 1,400 or 2 percent of the looms. ITMF reported that
short-staple spindle shipments plunged in 2008. Though Indonesia imported 179,000 fewer spindles in
2008 than in 2007, it still accounted for 2.9 percent of shipments. Shuttleless loom shipments also
dropped sharply, but Indonesia increased its imports to 1,700 in 2008, and its share rose to 4
percent. Indonesia also accounted for 530 or 2.5 percent of circular and flat knitting machines
shipped to Asia.

The Association of Italian Textile Machinery Manufacturers noted in the 7th edition of “The
World’s Textile Machinery Industry: An Overview of Trade Flows and Market Shares 2002-2008” that
Indonesia was one of only three countries among the world’s top ten markets for textile machinery
that saw an increase in demand. While most countries’ imports of Italian textile machinery
drastically decreased, Indonesia’s imports increased by 36 percent in 2008 over 2007.


According to the June 2009 edition of the World Bank’s Indonesian Economic Quarterly, though
the textile industry was impacted by the global economic downturn, Indonesia’s apparel exports
experienced strong and sustained growth in 2008. After textile production fell in December,
quarterly data show a recovery in 2009. And in spite of the global financial conditions, the
country has received considerable foreign direct investments in textile and apparel manufacturing.
Indonesia’s textile and apparel exports depend particularly on affluent markets – such as North
America, the European Union, South and East Asia and Japan – which import the largest share of
these goods.

Though demand has decreased somewhat and competition among suppliers has become tighter,
with many companies reducing their workforces because of decreased orders, Indonesia’s textile
industry continues to show promise. With the government’s prioritization of the textile industry’s
development, the abundance of relatively cheap labor, the relatively strong domestic market and
increasing exports, Indonesia’s textile industry will continue its upward climb.

July/August/September 2009