Indonesia Fabric Market Outlook to 2030

Indonesia Fabric Market Overview

• The Indonesia fabric market is valued at USD 17.5 billion, driven by the country's robust textile and garment manufacturing industry. The sector benefits from the increasing domestic demand for fashion, home textiles, and industrial applications, along with strong export performance to global markets. Indonesias vast availability of raw materials like cotton and natural fibers, coupled with the governments supportive policies for textile producers, is further boosting the market. Key factors influencing the market include the rise of fast fashion and the growth of e-commerce channels, which have expanded market reach.
• Dominant regions in the fabric market include Java, Sumatra, and Central Sulawesi due to their well-established textile hubs and proximity to key ports that facilitate the export of fabric to other countries. Java, in particular, dominates due to its concentration of textile factories, skilled labor force, and established infrastructure. These regions benefit from government support and established trade networks, making them key players in both domestic and international fabric markets.
• The Indonesia Textile Act of 2023 regulates the production, trade, and export of textiles, aiming to ensure the sustainability and competitiveness of the industry. The act mandates that all textile manufacturers adopt eco-friendly practices and comply with global sustainability standards, such as OEKO-TEX and GOTS, to access international markets. This regulation has increased the cost of compliance but also offers export incentives for certified manufacturers.

Indonesia Fabric Market Segmentation

By Fabric Type: The Indonesia fabric market is segmented by fabric type into cotton fabric, polyester fabric, silk fabric, and technical fabrics. Cotton fabric has a dominant market share in the fabric type segmentation due to its high domestic production and versatility across various industries such as apparel and home textiles. The demand for cotton is also bolstered by its eco-friendly nature and consumer preference for natural fabrics, particularly in the fashion sector. Cottons strong integration into Indonesia's textile value chain, from raw cotton farming to finished fabric production, strengthens its leadership in the market.

By Application: The fabric market in Indonesia is segmented by application into clothing and apparel, home textiles, industrial applications, and medical textiles. The clothing and apparel segment has a dominant market share due to Indonesia's strong fashion and garment industry. This sector benefits from the countrys low labor costs, making it a preferred destination for global fashion brands looking to source apparel. Moreover, the domestic fashion industry has seen a rise in demand for ready-to-wear clothing, contributing to the growth of this segment.

Indonesia Fabric Market Competitive Landscape

The Indonesia fabric market is dominated by a mix of local and international companies that leverage the countrys abundant raw materials and low production costs. Major players include textile manufacturers that cater to both domestic consumption and export demand. Companies such as PT Sri Rejeki Isman Tbk (Sritex) have capitalized on advanced manufacturing technologies and economies of scale to maintain their competitive edge.

The competitive landscape is shaped by these key players' ability to innovate and scale up production. These companies also benefit from Indonesias strategic location, low labor costs, and strong government support for the textile sector.

Indonesia Fabric Market Analysis

Growth Drivers

• Rising Textile Exports (Export-Import Fabric Balance): Indonesia's textile exports play a significant role in its economy, contributing to foreign exchange earnings. In 2023, the country exported textiles worth $13 billion, with fabrics being a major component of these exports. Indonesia has a favorable trade balance in textiles, with fabric exports significantly exceeding imports. The export of fabrics to key markets like the USA, Japan, and European countries has grown, driven by Indonesias robust manufacturing capabilities and high-quality production.
• Increasing Demand for Technical Textiles: The demand for technical textiles in Indonesia has been rising due to their application in various industries, including automotive, construction, and healthcare. In 2024, technical textile production increased by 20 million square meters compared to 2022. This growth is driven by the need for high-performance textiles in industrial applications and a rise in government projects like road development and healthcare infrastructure. Indonesias focus on diversifying its textile portfolio beyond traditional clothing has significantly boosted this sector.
• Growing Domestic Fashion Industry (Clothing): The domestic fashion industry is a key growth driver for Indonesias fabric market, with the apparel market reaching $25 billion in 2024. Major Indonesian cities like Jakarta and Bandung are hubs for fashion manufacturing, particularly for mid-market and luxury segments. The growing middle class and increased consumer spending on fashion have led to greater demand for diverse fabrics, including cotton, silk, and synthetic textiles.

Market Challenges

• Competition from Low-Cost Countries: Indonesia faces stiff competition from low-cost textile producers like China and Vietnam, both of which dominate the global textile market. In 2023, China exported $160 billion worth of textiles, while Vietnam exported $40 billion, making it difficult for Indonesian fabric manufacturers to compete on price alone. The higher costs of production in Indonesia, particularly labor costs, reduce its competitiveness, necessitating investments in innovation and quality to maintain its market share.
• Rising Raw Material Costs: The cost of raw materials, such as cotton and polyester, has fluctuated significantly in Indonesia, impacting fabric production. In 2024, the price of cotton reached $1.50 per pound, a sharp increase from the previous year due to supply chain disruptions and weather conditions. Polyester prices have also risen due to increased oil prices, which affect the production of synthetic fibers. These rising raw material costs strain the profitability of fabric manufacturers, especially those in the low-cost segment.

Indonesia Fabric Market Future Outlook

Over the next five years, the Indonesia fabric market is expected to experience steady growth driven by continuous innovation in fabric technologies and the increasing demand for sustainable textiles. The governments continued support for the textile industry, in terms of subsidies and trade agreements, is expected to further stimulate both production and exports. Additionally, the growing focus on e-commerce and digital transformation in retail will provide new growth opportunities for fabric manufacturers, as they cater to the rising demand for ready-to-wear garments and fashion products.

Market Opportunities

Opportunities

• Sustainability Initiatives in Fabric Production: There is a growing demand for eco-friendly fabrics and organic cotton in Indonesia, driven by international and domestic consumers. In 2024, organic cotton production reached 15,000 metric tons, a notable increase from previous years. The government has supported sustainable textile initiatives by providing tax incentives to companies producing organic and recycled textiles. This shift toward sustainability presents a significant opportunity for fabric manufacturers to cater to high-demand markets in Europe and North America, which prioritise eco-friendly products.
• Expansion into International Markets: Indonesias fabric market holds significant export potential, particularly in Southeast Asia, Europe, and the USA. In 2023, Indonesia exported $13 billion worth of textiles, with a growing share of exports going to these regions. The ASEAN Free Trade Agreement has opened up new markets in Southeast Asia, while increased demand for sustainable fabrics in Europe and the USA offers further growth opportunities. Government support for export infrastructure has also been a critical factor in facilitating access to international markets.