The textile and textile products industry (which includes garments or clothes) is a very important one for the Indonesian economy because this industry ranks among the country’s biggest foreign exchange earners (thanks to strong exports), while also providing jobs to more than 3.7 million Indonesians, and contributing nearly seven percent to the country’s gross domestic product (GDP) – provided we only take non-oil and gas manufacturing into account – or around 1.25 percent of total GDP.
However, Indonesia’s textile industry is also facing several serious challenges. Not only has the COVID-19 crisis impacted brutally on this industry (which has led to an estimated 65 percent of textile workers being sent home temporarily), but there has also been a structural lack of new investment in this industry in recent years, while existing players have been needing to compete with a growing amount of imports from abroad into Indonesia (particularly from China).
Indonesia’s Textile Industry in Global Perspective
Despite ongoing challenges, Indonesia does rank among the world’s biggest textile producing countries. Based on worldwide textile output in 2019 (which was before the COVID-19 crisis disrupted the whole world economy), Indonesia ranked sixth; a decent ranking, although Indonesia finds itself far behind world number one, China, in terms of global market share. China leads, mainly due to its rising production and sales of materials such as cotton, yarn, fiber, and other finished products or apparels.
According to consulting firm Grand View Research, the global textile market size was projected at USD $1,000.3 billion (or USD $1.00 trillion) in 2020, and is expected to expand at a compound annual growth rate (CAGR) of 4.4 percent from 2021 to 2028, with growing demand for apparel from the fashion industry and further expansion of e-commerce platforms expected to drive the market over the forecast period.
Prior to the COVID-19 crisis, demand for apparels was especially driven by growth in developing countries such as China, India, Mexico, and Bangladesh. To what extent the COVID-19 crisis disrupted this situation in a structural manner remains unclear for now.
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