According to kompas.id, Indonesia’s garment export value has remained stagnant at $8–9 billion for nearly a decade, despite a strong manufacturing base, experienced workforce, and long-standing relationships with global buyers.
Root Causes of Stagnation
Vector Consulting Group identifies the core constraint not as labor cost alone but as systemic operational gaps. Rajesh Inamdar, Country Head–Indonesia at Vector Consulting Group, stated on Friday, August 28, 2026:
“Competitiveness in Indonesia’s garment industry cannot be viewed solely through the lens of labor costs or government policy.”
He emphasized that factory-level efficiency—converting labor hours into finished goods—directly impacts both production cost and delivery reliability.
The firm’s research shows that systematic improvements in production execution could boost sewing line efficiency by 20–30%, cut lead times by 20–30%, and raise on-time-in-full (OTIF) delivery performance to above 90%. These gains hinge on disciplined execution across planning, procurement, sales coordination, and style-level capacity scheduling.
Supply Chain Reliability Is Non-Negotiable
P Senthilkumar, Senior Partner at Vector Consulting Group, stressed that isolated gains—such as higher sewing efficiency—are insufficient without end-to-end supply chain reliability.
“Ultimately, what global buyers purchase is not just the product—but trust.”
That trust depends on consistent fulfillment of quantity, quality, and timing commitments.
Delays in fabric procurement, frequent production schedule changes, or failure to meet shipping deadlines erode buyer confidence—even if sewing lines operate efficiently. The report underscores that sourcing appeal now rests on building a supply chain that is faster, more stable, and more predictable.
Vector estimates that resolving these operational bottlenecks could lift Indonesia’s garment export value by approximately $2 billion. Most of this potential can be captured by optimizing existing production capacity—not expanding it—through improved material availability, cross-functional coordination, and tighter execution discipline.
Broader Economic and Employment Impacts
Higher productivity and capacity utilization strengthen manufacturers’ financial health, enabling them to retain operations, secure new orders, and pursue expansion. While government policy on trade, infrastructure, and business climate remains important, Vector Consulting Group advises industry not to wait for external conditions to improve before acting.
Rajesh Inamdar noted:
“The greatest opportunity today is to enhance value and competitiveness from capabilities the industry already possesses.”
With its established manufacturing foundation, Indonesia retains significant room to reinforce its position as a competitive global garment production and sourcing hub.
Source: kompas.id
Compiled from international media by the SCI.AI editorial team.
