The Textile Industry in Indonesia was valued at USD 13.8 billion in the year 2019 and is estimated to reach USD 14.49 billion by the end of the year 2020.
It is expected to grow at the CAGR of 5% within the time horizon of 2020-2025 because of increasing demand for natural fibres, growing apparel market, increasing export of textiles, and rising governmental investment in the textile sector.
However, after pandemic outbreak of COVID-19, the overall Indonesian textile industry is expected to grow at a CAGR of 1% within the forecast period of 2020-2025.
Its market value will reach USD 15.22 billion by the end of the year 2025.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Trends
- Industry Challenges
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Distribution Chain Analysis
- Competitive Factors
- Key Market Players
- Strategic Conclusion
- References
- Appendix
Definition / Scope
A textile is a material that is formed by interlocking the network of yarns and threads together. These textile products are prepared from weaving, knitting, knitting, tatting, and braiding of raw natural or synthetic fibers.
The major sources of these textile materials are animal (wool, silk), plant (cotton, jute, bamboo), mineral (asbestos, glass fiber), and synthetic (nylon, rayon, acrylic). In the context of Indonesia, the major export destination of the Indonesian textile industry is the US, Japan, China, South Korea, and others.
The textile industry in Indonesia is concerned with the production, design, manufacture, distribution, and sale of yarn, cloth, and clothing. Based on the type of textile materials, the textile industry in Indonesia is categorized into the fabric, garment, fiber, yarn, and others.
Market Overview
In the context of Indonesia, the textile industry accounts for almost 11% of the total manufacturing exports of Indonesia in the year 2019. The total market size of the textile industry in Indonesia is valued at USD 13.8 billion in the year 2019 and is expected to reach USD 14.49 billion in the year 2020.
Its market value is expected to grow at a CAGR of 5% within the forecasted time horizon of 2020-2025 before the outbreak of the novel Coronavirus. However, after the pandemic outbreak of COVID-19 disease, it has been expected that the export value of the textile industry in Indonesia is expected to drop at a rate of 4% annually since the year 2019.
As a result, the textile industry in Indonesia is expected to grow at a CAGR of 1% within the forecasted time horizon of 2020-2025 after the COVID-19 outbreak. Its market value is expected to reach USD 15.22 billion by the end of the year 2025.
Based on the textile type, the fabric segment is leading the market with a market share of almost 40.83% of the total textile industry in Indonesia. The market size of this segment is valued at USD 5.63 in the year 2019.
Based on the export destination, the US segment is leading the market with a market share of almost 32.87% of the total textile industry in Indonesia. The market size of this segment is valued at USD 4.53 billion in the year 2019.
Increasing demand for natural fibers, growing apparel market, increasing export of textiles, and rising governmental investment in the textile sector are the factors responsible for the growth and development of the textile industry in Indonesia. However, the pandemic outbreak of COVID-19, higher tariffs & non-tariff barriers for garments inputs imports, and declining cotton production might restrain the growth and development of this market.
The key market players engaged in the operation of its market are PT Sri Rejeki Isman Tbk, PT Asia Pacific Fibers Tbk, Indorama Corporation, PT Pan Brothers Tbk, and PT Tifico Fiber Indonesia TBK, etc.
Market Risks
Pandemic outbreak of COVID-19
The pandemic outbreak of the COVID-19 disease has affected the manufacturing and supply of the clothing products as the country has adopted the lockdowns and social distancing measures to control the transmission of the novel coronavirus.
In the context of Indonesia, the exports of textile and textile products have been reduced by almost 52% in May 2020 in comparison to May 2019. Along with this, the domestic retail sales of clothing had been decreased by almost 74%.
Not only in Indonesia, but the retail sales of apparel have also been decreased by almost 88% in April 2020, in comparison to the year 2019.
It has also affected the export of Indonesian textile products as the United States is the largest destination for the exports of these products accounting for almost 60% of the export of Indonesian garments.
Top Market Opportunities
Increasing demand for natural fibers
Globally, the natural fibers composites market is expected to grow at a CAGR of 10.5% within the forecasted time horizon of 2020-2025. Within the past decade, the volume of the production of natural fibers has been increased from almost 28 million tons to 35 million tons in terms of volume.
Here, almost 81% of the natural fiber production is accounted for by cotton as per the volume of cotton production. It is followed by Jute (7%), coir (3%), and wool (3%). The market size of the global natural fibers market is valued at USD 5009.7 million in the year 2019.
Its market value is expected to reach USD 6421.4 million by the end of the year 2025. Indonesia imports cotton from the United States, Australia, and Brazil majorly, which accounts for the amount of USD 300 to USD 600 million per year.
In the context of Indonesia, the government is promoting the use of locally-grown natural fibers such as silk, cotton, banana, etc. The rising demand for natural fibers is creating a significant opportunity for the growth and development of the textile industry in Indonesia.
Growing apparel market
In the context of Indonesia, the market value of apparel products is in increasing trend. The market value of the Indonesian apparel market is expected to grow at a CAGR of 10.3% within the forecasted time horizon of 2020-2025. The revenue of the Indonesian apparel market is valued at USD 14026 million in the year 2020.
The share of the textile and apparel product is expected to reach 5% by the end of the year 2030. The revenue of the apparel market is valued at about USD 51.28 per person in the year 2020. Here, in the apparel market, almost 38% of the total revenue of this market will be accounted for by online sales by the end of the year 2020. Along with this, the volume of the sales of apparel is also in an increasing trend.
The volume of the apparel is expected to reach 1,950 million pieces by the end of the year 2025. The growing apparel market in Indonesia is creating a significant opportunity for the growth and development of the textile industry in Indonesia.
Market Trends
Increasing export of textiles
Globally, Indonesia is the 12th largest exporter of textile and apparel and is the top 10th textile-producing country. The export value of the Indonesian textile and garment industry is valued at USD 13.8 billion in 2019, increased from USD 10 billion in the year 2018.
Here, almost 36% of Indonesian textile exports are accounted for by the United States of America, followed by the Middle East (23%) and European Union (13%). The government of Indonesia has adopted Industry 4.0 Masterplan to propel the textile industry of Indonesia as the top five largest textile producers in the world by the end of the year 2030.
The rising exports of textiles in the context of Indonesia are driving the growth and development of the textile industry in Indonesia.
Rising governmental investment in the textile sector
In the context of Indonesia, the investment of the textile sector from the governmental and non-governmental sector is in increasing trend. According to Indonesia’s Investment Coordinating Board, the investment in the textile industry of Indonesia has reached USD 759 million, increased from USD 558.87 million from the previous year.
The investment in the textile sector is expected to increase by almost 68% within a year. Along with this, the government of Indonesia has signed an agreement with other countries to promote the exports of textile products in foreign countries.
For instance, the government of Indonesia has signed the Indonesia-Australia Comprehensive Economic Partnership Agreement with the government of Australia.
Higher tariffs and non-tariff barriers for garments inputs imports
In the context of Indonesia, almost 18 to 30% of the garment sector production is dependent on the imported inputs of garments. In the year 2015, the Ministry of Trade has issued a new regulation for imports of garment inputs. According to it, all textile imports require approval from the Ministry of Trade.
In May 2020, it has announced the safeguard tariffs for almost 107 types of fabrics and six types of yarns. For instance, the import duty and VAT for textile products containing more than 85% by weight of cotton is about 7.5% and 10% respectively.
The government has imposed raw materials import restrictions, which will negatively influence the manufacturing of textile products in Indonesia. The unfavorable governmental regulations and imposed tariffs on the input tariffs for the import of textile and garment products.
Industry Challenges
Declining cotton production
In the context of Indonesia, the production of cotton is on a decreasing trend. The production of cotton has been decreased from almost 5443 metric tons in the year 2014 to almost 435 metric tons in the year 2019. It has been expected that the production of the cotton will drop further to almost 355.05 metric tons in the year 2020.
However, the consumption of cotton is in increasing trend and is expected to reach 794866.79 metric tons in the year 2020. It is quite challenging for the market players engaged in the textile industry to deal with the declining production of cotton in Indonesia.
Technology Trends
The adoption of new and advanced technologies is creating a favorable environment for the growth and development of the textile industry in Indonesia. Some of the key technological trends in this market are discussed as follows:
Virtual reality technology: This technology uses immersive interactive three-dimensional graphics, special hardware, and other audio mechanisms to create the simulations so as the real environment works.
3D printing and scanning: This technology.is capable to provide the real-life 3D visual appearance displayed in the computing devices. It enhances the accuracy, effectiveness, and efficiency of the collection of garments.
Automation technology: This technology assists the manufacture and design of textile products with minimal human assistance through the use of the control systems.
Internet of Things: The embedment of the sensors, software, and other technologies in the network enables the exchange of data related to textile production with other devices over the internet.
Pricing Trends
The price of the textile products depends upon the type of textile materials, type of technology, availability of raw materials, and others. For instance, the price of 100% cotton printed fabric digital print fabric is about USD 3.5 to USD 7.8 per yard while the price of the textile printed cotton fabric new design is about USD 3.2 to USD 5.9 per meter.
The price of textile low price guaranteed quality digital textile printing is about USD 10 to USD 11.5 per meter. The price of good quality woven textiles 97 cotton 3 spandex twill men pants fabrics is about USD 1.1 to USD 1.59 per meter.
According to Indonesian Textile Manufacturers, the price of raw materials has been increased by almost 5-6%. The minimum wages in Indonesia has been increased by almost 8.5% for the year 2020.
Regulatory Trends
The Ministry of Trade of Indonesia is responsible for the regulations of the textile industry in the context of Indonesia. In the year 2019, the government of Indonesia has imposed an import duty up to 67.7% on the import of textile and textile products. Some of the other regulations directly or indirectly related to the textile industry in the context of Indonesia are discussed as follows:
Ministry of Trade Regulations No 39/2010: This regulation is related to the importation of the finished goods by manufacturers. According to this regulation, the manufacturers engaged in the textile industry are allowed to import the finished goods tariff-free following their business line and import license.
Ministry of trade regulation No. 45/2009: According to this regulation, the companies engaged in the textile industry must have either a General Import License or the Producer Import License for the import of the textile products.
Ministry of Finance Decree No 241/2010: This law has been set out for the classification of goods systems and the imposition of import duty for imported goods.
Market Size and Forecast
The total market size of the textile industry in Indonesia is valued at USD 13.8 billion in the year 2019 and is expected to reach USD 14.49 billion in the year 2020. The overall market value of Indonesian textile industry is expected to grow at a CAGR of 1% within the forecasted time horizon of 2020-2025 after COVID-19 outbreak.
Its market value is expected to reach USD 15.22 billion by the end of the year 2025. The textile industry is one of the largest market accounting for almost 11% of the total manufacturing exports of Indonesia in the year 2019.
Based on the textile type
- The fabric segment is leading the market with a market share of almost 40.83% of the total textile industry in Indonesia. The market size of this segment is valued at USD 5.63 in the year 2019.
- The garment segment accounts for a market share of almost 39.72% of the total textile industry in Indonesia. The market size of this segment is valued at USD 5.48 billion in the year 2019.
- The fiber segment accounts for a market share of almost 9.72% of the total textile industry in Indonesia. The market size of this segment is valued at USD 1.34 billion in the year 2019.
- The yarn segment accounts for a market share of almost 7.77% of the total textile industry in Indonesia. The market size of this segment is valued at USD 1.07 billion in the year 2019.
Based on the export destination
- The US is leading the market with a market share of almost 32.87% of the total textile industry in Indonesia. The market size of this segment is valued at USD 4.53 billion in the year 2019.
- Japan accounts for a market share of almost 10.08% of the total textile industry in Indonesia. The market size of this segment is valued at USD 1.39 billion in the year 2019.
- China accounts for a market share of almost 5.7% of the total textile industry in Indonesia. The market size of this segment is valued at USD 0.78 billion in the year 2019.
- South Korea accounts for a market share of almost 4.7% of the total textile industry in Indonesia. The market size of this segment is valued at USD 0.64 billion in the year 2019.
Market Outlook
Before the pandemic outbreak of novel corona virus, the textile industry in Indonesia was growing at a CAGR of 5% because of increasing demand for natural fibers, growing apparel market, increasing export of textiles, and rising governmental investment in the textile sector.
However, after pandemic outbreak of novel coronavirus, the export of textile and textile products of Indonesia has been dropped by almost 52% in May 2020 in comparison to May 2019.
Along with this, the domestic retail sales of clothing have been decreased by almost 74% because of the imposition of social distancing and lockdown measures. Because of this, the total textile industry in Indonesia is expected to drop at a rate of 4% since the year 2019.
As a result, the overall textile industry in Indonesia is expected to grow at a CAGR of 1% within the forecasted time horizon of 2020-2025 after the COVID-19 outbreak.
Effect of COVID-19 on Textile Industry in Indonesia
The pandemic outbreak of the COVID-19 disease has negatively influence on the global supply chain and availability of workers. Following changes has been occurred in the textile Industry in the context of Indonesia:
- The textile industry has faced the issue of the scarcity and laid off of the workers. Because of the impose of the large-scale social restriction for the working population in the context of Indonesia, more than 30,000 laid off in Jakarta, almost 30,000 people were laid off in West Java and Central Java.
- Some of the companies engaged in textile market has faced the issue of the shortage of raw materials as it is dependent on the import of the raw materials from other countries. For instance, almost 20 to 50% of the raw materials are outsourced from China. According to Indonesian Chamber of Commerce, it has been expected that the production capacity of the factories will be declined by almost 30% on average due to disruption in supply chain.
- Because of this pandemic situation, the line of production of the textile has been shifted towards the production of the protective gear for medical personnel. Almost 20 million washable masks and 100,000 jumpsuits were planned to be produced by the end of the April, 2020. It has been expected that the combined production capacity of 31 textile manufacturers and 2900 garment production facilities is almost 17 million pieces of personal protective equipment per month.
- The value of the Indonesian Rupiah has also depreciated and has caused increase in the cost of production due to the rise of the prices of raw materials such as cotton.
- In order to deal with this crisis situation, the government of Indonesia has planned to reduce the number of the restricted import goods by almost 50%.
Technology Roadmap
The major technological changes occurring in this textile industry in Indonesia are virtual reality technology, 3D printing & scanning, automation technology, the internet of things, etc.
Along with this, the use of nanotechnologies, self-cleaning, fire-repellent, water-repellent fabrics, DNA clothing, smart clothing, and other composite materials are enhancing the quality of the textile products. The adoption of new and advanced technologies is creating a favorable environment for the growth and development of the textile industry in the context of Indonesia.
Distribution Chain Analysis
The key stakeholders involved in the operation of this textile industry in Indonesia are raw materials suppliers, textile manufacturers, distributors, retail & online sales, and end-users.
At first, the raw materials required for the design and production of the textile are supplied to the textile products manufacturing companies. The designed textile products then are distributed to retail and online sales to make them available for the end-users.
Competitive Factors
The key market players engaged in this textile industry are competing for the product portfolio expansion, investment in research and development activities, pricing, mergers & acquisitions, geographical expansion, and collaborations.
Along with this, they are focused on the use of the technologically advanced equipment for the manufacture, design, and production of textile products to enhance the quality of the textile products as well as to improve the efficiency and effectiveness of the production of the textile products.
Key Market Players
The key market players engaged in the operation of its market are PT Sri Rejeki Isman Tbk, PT Asia Pacific Fibers Tbk, Indorama Corporation, PT Pan Brothers Tbk, and PT Tifico Fiber Indonesia TBK, etc. Short profile of the key market players engaged in the Indonesian textile industry are discussed as follows:
PT Sri Rejeki Isman Tbk: It is one of the largest textiles and garment manufacturers of the Southeast Asian region. It’s major for production units are spinning, weaving, dyeing and garment. It is distributing and selling its yarn, fabrics, and other textile products in almost 55 countries all over the world. This company has the capacity of the production of 566,000 bales of yarn per year.
PT Asia Pacific Fibers Tbk: It is the Indonesian textile manufacturing company engaged in the sector of the chemical industry, and weaving & knitting of synthetic fibers. Its major products are purified terephthalic acid, polyester chips, polyester staple fiber, polyester filament, and performance fabrics.
Indorama Corporation: It is an Indonesian company engaged in the manufacture of textile, polyester, PET, and spandex. The major products of this company are polyester filament yarns, PET resin, purified terephthalic acid, polyolefins, spandex filament, fabrics, etc.
PT Pan Brothers TBK: It is one of the leading garments manufacturing company of Indonesia owning almost 23 factories in the eight cities of Indonesia. Its major products are technical, and activewear jackets for snowboarding, ski outerwear, jogging, hiking, and woven garments.
PT Tifico Fiber Indonesia TBK: It is the Indonesian textile manufacturing company engaged in the manufacture and sale of polyester chips, staple fiber, and filament yarn. Along with this, it is engaged in the import and export of various fiber and other products.
Strategic Conclusion
The textile industry in Indonesia is expected to grow at the CAGR of 5% within the forecasted time horizon of 2020-2025 because of increasing demand for natural fibers, growing apparel market, increasing export of textiles, and rising governmental investment in the textile sector.
However, the pandemic outbreak of COVID-19, higher tariffs & non-tariff barriers for garments inputs imports, and declining cotton production might restrain the growth and development of this market. Its market value will reach USD 18.49 billion by the year 2025.
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Appendix
- US= United States
- USD= United States Dollar
- CAGR= Compound Annual Growth Rate
