Indonesia is preparing to establish a new state-owned enterprise dedicated to the textile sector. The initiative, directed by President Prabowo Subianto, reflects the government’s view of textiles and garments as a frontline industry in navigating global trade challenges. With significant funding and a roadmap in place, the plan aims to modernize production and expand exports over the next decade.
Key Facts & Background
- Policy Direction:
- Announcement made by Coordinating Minister for Economic Affairs Airlangga Hartarto.
- Based on President Prabowo Subianto’s directive during a meeting in Hambalang, Bogor, on 11 January 2026.
- Revives the concept of a state-owned textile enterprise once active in the past.
- Funding Commitment:
- Government allocates USD 6 billion through BPI Danantara.
- Funds to be used for capital goods procurement, adoption of new technologies, and export expansion.
- Export Ambition:
- Roadmap targets an increase in textile exports from USD 4 billion to USD 40 billion within 10 years.
- Focus on strengthening the textile and garment value chain.
- Current Challenges:
- Weaknesses identified in yarn production, fabric manufacturing, dyeing, printing, and finishing.
- Need for modernization and deeper integration across the supply chain.
- Strategic Roadmap:
- Government preparing a comprehensive plan to reinforce the textile and apparel industry.
- Emphasis on industrial upgrading, value chain development, and global competitiveness.
Strategic Insights
The decision to form a new state-owned textile company highlights Indonesia’s recognition of textiles as a strategic industry vulnerable to external trade pressures, particularly tariff policies from major markets like the United States. By channeling substantial investment into modernizing production and strengthening the value chain, the government seeks to transform the sector from a low-margin industry into a globally competitive player. The roadmap’s ambitious export target reflects confidence that with the right infrastructure and technology, Indonesia can significantly expand its share in international markets.
Beyond trade resilience, the initiative underscores the role of industrial policy in shaping long-term economic transformation. A dedicated textile SOE could serve as a catalyst for innovation, workforce development, and integration of advanced technologies, while also supporting small and medium enterprises within the supply chain. If executed effectively, the plan may not only secure Indonesia’s position in global textile trade but also contribute to broader goals of industrial diversification, job creation, and economic independence.