Thai garment companies should target Indonesia as the country with the brightest trade prospects among ASEAN nations, according to KResearch.

The company drew attention to Indonesia's economic growth, which it said had helped to raise disposable incomes and purchasing power for apparel, mirrored in steady growth of apparel sales in the past four to five years.

There had been a continuous increase in foreign direct investment into the country’s textile and garment industry, and a rapid urbanisation and strong demand for apparel.

In addition, Indonesian consumers had similar fashion tastes to those found in Thailand, KResearch said.

Thai garment exports to Indonesia were expected to reach US$8m this year, up 43% on 2011, the company added, thanks to economic growth and efforts by Thai garment exporters and retailer and shopping mall investors.

However, the company also drew attention to a number of challenges in the Indonesian market, among them competition from other foreign garment suppliers that had already located production bases in the country.

Exporters would also have to cope with frequent changes in regulations and stringent labour laws, the research business said, as well as the sometimes questionable skill level of Indonesian garment workers and a likely skilled labour shortage in the near future.