Indonesia Industry

The textiles industry in Indonesia is growing steadily, nudging Jakarta closer to its long-term goal of rivalling China as a global leader in garment exports. However, sector players say stronger trade pacts are needed as well as more investment to maintain a competitive edge in the regional and international marketplace.

Growth in Indonesia’s manufacturing sector continues to outstrip the rest of the economy, with gains in most industries well above those of the national average. Some regions away from Java posted even higher rates of expansion, though there are lingering concerns some of this growth is underpinned by a reliance on commodities imports – one that fuels the current account deficit.

Indonesia is eyeing higher export levels in the second half of 2014, despite continuing concerns over the impact of a controversial ban on shipments of a key commodity.

A move by Indonesia to limit its raw minerals exports could hasten the development of a local processing industry, but the strategy has downside risks as buyers look to alternative sources.

An expanding middle class and a broadening economic base have been cited as two of the driving forces behind the forecast for rapid expansion of the Indonesian automotive industry, with predictions that domestic and regional demand will combine to boost growth over the next few years. However, rising interest rates and a weaker rupiah may put a damper on sales in the more immediate term.

From cocoa to mobile phone handsets and cement to aircraft, Indonesia’s industry sector is surging as firms look to make inroads within the region and further abroad. However, a lack of infrastructure remains a limiting factor on growth.