Market landscape
Indonesia’s apparel and footwear industry relies heavily on export activities and outsource manufacturing for global fashion brands. The industry was known to absorb a significant number of workers as it is labor-intensive and requires little formal training. In 2020, the number of workers in large and medium-scale apparel manufacturing alone amounted to close to seven hundred thousand.The industry has also positioned Indonesia as one of the biggest global suppliers of apparel and footwear, with the United States, Japan, and Germany among its main export destinations. In 2021, wearing apparel exports from Indonesia to the United States amounted to more than 4.9 billion U.S. dollars. The industry is set to become one of the top five leading global textile producers as a part of the government’s Fourth Industrial Revolution (4IR) masterplan. The 4IR blueprint aims to boost Indonesia’s manufacturing sector, with textile and apparel being one of five targeted industries, and become a powerhouse by 2030. The 4IR initiatives allow the industries in focus to transform their operation, as well as improve productivity and competitiveness through direct access to more substantial investments, both in technology and R&D.
Despite already being home to many well-known global fashion brands and companies, Indonesia is projected to benefit from the increasing number of global apparel companies looking to reduce or even stop outsourcing their production in China. This will, in turn, further boost industry development in Indonesia. Boasting a young and growing labor force and relatively low labor costs, Indonesia offers an appealing alternative. As of April 2022, the monthly minimum wage in Indonesia amounted to approximately 307 U.S. dollars.
