Workers inspect the quality of dyed fabric for export at the Trisula Textile Industries factory in Cimahi, West Java. — AFP/VNA File Photo

JAKARTA — Indonesia plans to establish a new state-owned enterprise (SOE) focused on the textile and garment sector, a move aimed at strengthening the industry against external shocks, including US tariff risks and the flood of Chinese textile imports in recent years, reported The Business Times.

Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto recently announced that the company will be directly managed by Danantara, the country’s sovereign wealth fund, with an initial funding allocation of up to US$6 billion.

The funds will be directed towards capital equipment procurement, adoption of new technologies and export expansion initiatives.

Airlangga said the government has outlined a comprehensive roadmap for the sector, targeting an increase in textile exports from $4 billion currently to $40 billion over the next decade.

The plan also emphasises deepening the domestic value chain, which includes spinning, weaving, dyeing, printing and finishing processes, areas that remain weak in Indonesia compared to regional peers.

The move comes after the US imposed a 19 per cent tariff on select Indonesian textile products. Indonesia typically ships around $2 billion worth of textiles to the market annually. The local industry, which employs more than six million workers, has also been grappling with mounting challenges, notably from a surge of low-cost Chinese imports. — VNA/VNS