Indonesia's industry continues to face significant pressure amidst the expansionary trend of the national textile manufacturing sector. The Ministry of Industry (Kemenperin) recorded an Industrial Confidence Index (IKI) of 53.45 in November 2025. However, of the 23 manufacturing subsectors, the textile industry was the only one to experience a decline—even for two consecutive months after October 2025, showing similar results.
Several factors are considered to be contributing to the weakening of the national textile industry. Unrecovered demand, coupled with rising prices of raw materials and auxiliary materials, have led to rising selling prices and depressed retail sales. A similar situation is occurring in the fabric finishing industry, as the market remains short of finished fabric stocks, preventing optimal production activities.
The stability of industry players is being further tested by the weakening rupiah against the US dollar and rising inflation since the third quarter. These pressures have forced many factories into a defensive phase to maintain operations.
Ministry of Industry Spokesperson Febri Hendri Antoni Arief explained that the contraction was primarily felt by export-oriented industries. Meanwhile, industries focused on domestic sales continued to show expansion. Febri also highlighted the issue of textile products from bonded zones entering the domestic market. Bonded zone facilities are provided to support exports through various fiscal incentives. When products from bonded zones are released into the local market, competition becomes unbalanced for industry players outside the zone.
Sectors in the Textile and Textile Products (TPT) industry also voiced their concerns. David Leonardi, Deputy Chairman of the Indonesian Textile Association (API), stated that the repeated contractions signaled industry players' pessimism regarding business prospects. He stated that the rise in illegal imports is a major factor suppressing factory capacity utilization, reducing production, and increasing market demand for local products.
The condition of the upstream industry is even more concerning. The Secretary General of the Indonesian Fiber & Filament Yarn Producers Association (APSyFI), Farhan Aqil Syauqi, revealed that five factories had closed operations throughout 2025, resulting in the layoffs of approximately 3,000 workers. Six other factories are now operating at less than 50 percent capacity, with some operating at reduced production. He emphasized that the onslaught of import dumping is the primary cause of the upstream industry's inability to compete.
Farhan also warned that the end of the year is a crucial moment in determining import quotas. If import policies are not controlled, the potential for more factory closures is very likely. He called for transparency regarding import quotas so industry players can plan production for the following year with greater certainty.
Although significant challenges still loom, several industry players see a glimmer of hope. The Chairperson of the Indonesian Garment and Textile Association (AGTI), Anne Patricia Sutanto, believes the downstream sector is beginning to show a faster recovery. Domestic orders are increasing, export markets are starting to revive, and business confidence is slowly growing. However, this recovery is uneven, as the fiber and yarn industry is still operating under intense pressure.
Anne believes that tightening supervision of illegal imports and cracking down on the used clothing trade have had a real positive impact on the ground, from increased production shifts, more stable employment, to the re-emergence of investor confidence.
She is optimistic that if protectionist policies, industrial transformation, and strict law enforcement are consistently implemented, the Indonesian textile and textile industry will return to growth by 2026. Early signs of recovery are already visible, and the next task is to ensure this momentum is not further derailed by major flooding.