Garment Manufacturing Industry Overview in Indonesia, 2011-2020

The large population of Indonesia created great demand for textile and garment, which formed a stable domestic market in recent years. In terms of overseas market demand, the garments, foot-wears and hats all have certain market in countries and areas like the U.S.A., European Union, Japan, Middle East and Africa. As the manufacturing base for various international famous brands, Indonesia had an export value of about USD 8 billion in 2014.

The textile and garment industry was one of the earliest developed industries in Indonesia. However, it was confronted with difficulties due to poor internal and external environment and its declining competitiveness in last two years, which was indicated by the shrinking total output value, limited export, dropping profitability, overstock and layoff. Under this background, the textile and garment industry of Indonesia urged the government to join TPP to promote the export and provide comprehensive support.

According to statistics, the textile and total output value of garment industry in Indonesia decreased YOY, while manufacturing industries in the corresponding period increased in 2015. Therefore, the proportion of the total output value of textile and garment industry in GDP decreased from 1.32% in 2014 to 1.21% in 2015. In terms of other indexes, those of the textile and garment industry are negative in Indonesia in 2015, which all experienced a decline except the capital expense and a significant deterioration compared to 2014.

In terms of domestic environment, the export growth was restricted by weak overseas market demand and the price of bulk commodity decreased which led to the investment drop of the resource industries. Therefore, the economic growth was relatively weak in recent years in Indonesia. According to statistics of Indonesia’s central bank, the growth rate of Indonesia’s GDP was 4.8% in 2015, which was the lowest in last six years. As the economic growth rate slowed down and their currency devaluated, consumers’ confidence fell accordingly, which led to the limited demand for garment consumption in Indonesia. Under the circumstances, the sale of textile and garment industries in domestic market is blocked. On the one hand, it is because that garments are considered to be basic needs to a great extent. On the other hand, consumers’ sensitivity towards price enhances, which is transferred to import product with lower prices.

Source: http://www.shcri.com/clothing/33302-garment-manufacturing-industry-overview-in-indonesia-2011-2020.html