Indonesia plans to establish a new state-owned enterprise (SOE) for the textile and garment sector to strengthen the industry against external pressures such as U.S. tariff risks and the surge of Chinese textile imports in recent years.
Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that the firm will be overseen by Danantara, the nation’s investment and sovereign wealth manager, and will receive an initial funding allocation of up to $6 billion.
The fund will be allotted for acquiring capital equipment, implementing new technologies, and supporting initiatives to expand exports.
Airlangga noted that the government has laid out a detailed roadmap for the sector to boost exports from the current $4 billion to $40 billion within the next ten years.
The strategy also focuses on strengthening the domestic value chain, covering spinning, weaving, dyeing, printing, and finishing, areas where Indonesia continues to lag behind regional competitors.
“By establishing this new SOE, we aim to drive modernization and strengthen the industrial backbone of our textile sector,” Airlangga said. “It is crucial to enhance value-chain capabilities to compete internationally and reduce dependency on imported intermediate products,” he added.
The decision follows Washington’s imposition of a 19% tariff on certain Indonesian textile products, which could undermine the country’s competitiveness in a vital export market. Indonesia ships roughly $2 billion worth of textiles to the U.S. each year, making the new duties a significant burden on one of its key trade channels.
The nation’s textile sector, employing over six million people, has been facing increasing challenges, particularly due to the rise in inexpensive Chinese imports.
Redma Gita Wirawasta, chairperson of the Indonesian Fiber and Filament Yarn Producers Association, stated that the initiative is part of a wider strategy to rejuvenate Indonesia’s manufacturing sector and shift toward higher value-added production.
Analysts also caution that without substantial government support, the industry may keep losing its competitive edge. The establishment of the state-owned firm is anticipated to promote modernization and strengthen the industry’s capabilities.
LOGISTICS INDUSTRY | Port Saint John, DP World Complete $178M Modernization Project
