Recently, Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto revealed at a press conference that 15 overseas textile investors plan to relocate their factories from China to Indonesia to promote the development of this labor-intensive industry. He said that the reason why these investors choose Indonesia is the current popular “China +1″ business strategy.

“China +1″ business strategy refers to the multinational companies to maintain or increase investment and business in China, while laying out new production bases or markets in other countries or regions (such as ASEAN, India, Mexico, etc.), in order to diversify investment risks and seize new market opportunities.

The strategy mainly stems from the current global situation and the rethinking of the supply chain by American buyers, which has led enterprises to seek other partners, and Indonesia, as an important economy in Southeast Asia, has attracted the attention of these investors with stable political environment and good investment policies, which also provides Indonesia with great opportunities.

Indonesia is one of the world’s top ten textile producers, with a complete industrial chain and vertically integrated industrial structure, from raw material procurement, spinning, weaving, printing and dyeing to finished product manufacturing and other links have production capacity, coupled with relatively low labor costs, rich raw materials and energy base, making Indonesia in the field of textile manufacturing has a strong competitiveness.

It is estimated that in 2024, the Indonesian textile market size is 13.83 billion US dollars and will reach 18.10 billion US dollars by 2029, with a compound annual growth rate of more than 5.54%.

Fifteen overseas textile investors are planning to move their factories from China to Indonesia, and it is reported that investors will also arrive in Indonesia in the near future for field visits. In this process, choosing the right industrial park is not only the core link of the inspection work, but also the key cornerstone to ensure the smooth landing of the factory and achieve long-term sustainable development.

Indonesia has several textile manufacturing clusters, with industrial parks mainly located in the Semarang and Batang regions of Central Java, as well as Bandung and West Java provinces. Cluster concentration of textile and garment factories, supporting industries and skilled labor, for textile factories seeking overseas expansion, choose these clusters of industrial parks to land is undoubtedly a wise choice.

| Central Java Industrial Park

Semarang Region: Semarang is one of the major industrial clusters in Indonesia, covering a wide range of industries such as textiles, furniture, electronics, luggage, footwear, food and machinery. The industrial park has perfect infrastructure, sufficient labor and relatively low cost, and the minimum wage standard is about 1475 yuan, which is suitable for the development of medium-sized and large-scale industries. In addition, Semarang is rich in natural resources such as natural gas, which can provide cost advantages for the textile manufacturing industry.

Kendal Industrial Park: The largest industrial development zone in Central Java, covering approximately 2,200 hectares, is renowned for its cost competitiveness, integration and sustainability. Strong industries in Kendall Industrial Park include textile processing.

Candi Industrial Estate: The infrastructure is perfect for medium and large industries, including the textile industry.

Wijayakusuma Industrial Estate: Close to the Java Sea, there are a variety of industries clustered, and the textile industry is one of them.

| Batang Prefecture

Batang Industrial Park: Provides a stable and clean water supply without flood effects, suitable for the development of light industries such as textiles.

Batang Integrated Industrial Park: Located on land owned by PTPN IX (Indonesia’s State-owned Plantation Corporation), the park covers an area of over 4,000 hectares and has a range of strategic location advantages including high accessibility and connectivity, land consolidation, competitive land prices and built-in infrastructure, which is also suitable for the development of the textile industry.

| Bandung Region

Bandung, located in West Java, Indonesia, is the fourth largest city in Indonesia and the capital of West Java province. Bandung Industrial Belt is Indonesia’s light industry capital, the overall climate is cool, Indonesia’s textile industry, luggage, light industry many are in Bandung.

Bandung Industrial Park: Textile manufacturing industry is the leading industry in the park, covering many links such as spinning, weaving, dyeing and finishing, printing and garment manufacturing. The company has advanced production technology and equipment, high quality products, strong competitiveness. At the same time, the quality of the labor force in the region is high, which provides rich human resources for the textile manufacturing industry.

| West Java Province

Jaba Beka Industrial Zone: One of the famous industrial zones in West Java, home to many types of businesses such as textile, electronics, automotive and food manufacturing.

| What should I pay attention to when setting up a factory in Indonesia?

The Indonesian government is open to the opening of foreign factories, that is, as long as the industrial plant can hold 100 percent of the shares, there is no need to joint venture with local enterprises.

The Indonesian government stipulates that factories must be settled in the local industrial park, but small and medium-sized factories (employing less than 99 people) can be conditionally exempted. The cost of land outside the industrial park is low, but the supporting facilities may be imperfect, and it is necessary to deal with the surrounding villagers and community relations, but the deep-level social relations and government relations are not foreigners can do, and a reliable park can save yourself a lot of unnecessary trouble.

In the “going out” site selection, we must take into account the convenience of transportation, power supply and water supply facilities, labor supply and other factors, choosing the right site is crucial to the operation of the textile factory.

Although Indonesia itself has the advantage of maritime transportation, the efficiency of transportation infrastructure is not as good as that of Thailand and Malaysia, so the logistics cost is higher and more time-consuming. Secondly, Indonesia’s industrial chain is not developed, enterprises must face additional logistics costs when importing raw materials, parts and other materials, if it involves import and export, try to choose close to the port, or convenient transportation area to set up factories.