Indonesia’s textile and garment industry is being repositioned as a growth sector. Policymakers argue that recent performance contradicts earlier concerns about structural decline. The sector is showing steady expansion despite global uncertainty. Investment and employment data point to continued relevance in the industrial base. However, external pressures continue to shape its outlook.
Key Facts & Background
- The textile and textile products (TPT) industry recorded 3.55% year-on-year growth in 2025, indicating a moderate but positive expansion trend.
- Export value reached USD 12.08 billion, with a trade surplus of USD 3.45 billion, largely driven by garment exports.
- The sector attracted Rp20.23 trillion in investment, reflecting continued investor confidence amid global uncertainty.
- Employment in the TPT industry reached 3.96 million workers, accounting for 19.48% of total industrial labor absorption.
- The broader manufacturing sector grew 5.30% in 2025, exceeding national economic growth of 5.11%, marking the first such occurrence in 14 years.
- Manufacturing contributes 19.07% to Indonesia’s GDP and accounts for 84.89% of total exports, underscoring its central role in the economy.
- Industrial confidence remains in expansion territory, with the Industrial Confidence Index (IKI) at 51.86 in March 2026.
- Despite positive indicators, the sector faces challenges including rising global raw material prices, supply chain disruptions, and fluctuating international demand.
Source: The Ministry of Industry
Insights
The government’s characterization of the textile sector as a “sunrise industry” reflects a shift in narrative from decline to recovery, supported by measurable improvements in exports, investment, and employment. The sector’s ability to maintain a trade surplus and attract over Rp20 trillion in investment suggests that it remains competitive within certain segments, particularly garment manufacturing. Its large labor absorption capacity also reinforces its role as a socio-economic stabilizer, especially in labor-intensive industrial regions. In this context, the sector’s recovery is not only economic but also structural, as it continues to anchor employment and export diversification.
However, the underlying growth rate of 3.55% indicates that expansion remains moderate rather than transformative. The industry is still highly exposed to global cost pressures and external demand cycles, limiting its resilience in prolonged downturns. Moreover, maintaining competitiveness will require sustained upgrades in technology, productivity, and value-added production, as low-cost advantages alone may not be sufficient. While the “sunrise” narrative highlights renewed optimism, the sector’s long-term trajectory will depend on how effectively it adapts to shifting global supply chains and increasing competition from other manufacturing hubs.