Indonesia has a market-based economy in which the government plays a significant role with more than 164 state-owned enterprises. Globally, Indonesia's textile and apparel industry generates over five per cent in value of the total country's exports. Indonesia has the fourth largest spinning capacity in the world behind China, Pakistan and India.

Indonesia is one of the countries which has suffered most from the recent Asian crisis and because of financial difficulties, its recovery globally is rather slow. The textile and apparel industry is one of the first industrial sector to have practically regained its situation before the crisis however.

Most of the garment making industry works on a subcontract basis or under licence to big international brands. Important groups, often in partnership, lead the textile and apparel industry in Indonesia, such as:

  • Daiwabo Group: 77,000 spinning spindles, 720 weaving machines, production capacity of 4 million metres per month.
  • KTSM: 37,000 spinning spindles, 400 weaving machines, production capacity of 2 million metres per month.
  • KITM: 37,000 spinning spindles, 200 weaving machines

About a dozen other groups have similarly important production capacities.

The export scene
The textile and apparel industry's exports dropped to $2.5bn in 1998, but these exports grew by 60 per cent in 1999 with $3.3bn export value, corresponding in weight to 310,000 tonnes. In 1998, USA was the main export destination of Indonesia's apparel, these exports representing 45 per cent of the total apparel exports.

This sector continues to attract foreign investors because of the very low cost of manpower. Presently, investments are generally of medium magnitude of about $1m. In 1999, 23 investment submissions in the garment-making sector had been approved the Indonesian authorities. The investment funds had diverse origins, for example the United Kingdom, Libya, and Taiwan, and were often in partnership.

The Indonesian authorities seem to be preparing an encouragement program, details of which are not yet disclosed, in order to boost exports for the textile and apparel industry and 15 other major product sectors. Experts forecast that the textile and apparel industry should achieve in the coming years export values of $8bn to $9bn.

Basic Data
Geography: Area: 2 million sq km.
Indonesia consists of more than 17,000 islands; 6,000 are inhabited; 1,000 of which are permanently settled.
Cities: Capital - Jakarta (est. 8.8 million). Other cities - Surabaya 3.0 million, Medan 2.5 million, Bandung 2.5 million.
People: Population 180 million in 1990, 208 million in 1999;
Population annual growth rate: 1.7% estimated;
Workforce: 90 million.

Economy

GDP: 1999 $142bn.
Annual growth rate: 1999 0.2%
Per capita income: 1999 - $684

By Marc de Laroche
Source: Textiles and economy: L'Industrie Textile magazine (France)
Basic data: US government website