"Indonesia plans to establish a new state-owned enterprise (SOE) to rejuvenate its struggling textile and garment industry and shield it from fallout from U.S. President Donald Trump's tariffs. The decision, announced on Jan. 14 by Airlangga Hartato, Indonesia's coordinating minister for economic affairs, places the SOE under the control of Danantara, Indonesia's sovereign wealth fund, which will pump up to $6 billion into the firm to produce new technology and expand exports."
"Indonesia's textile industry was already challenged by growing regional competition from places like China and Bangladesh, and a proposed 19% U.S. tariff on Indonesian textile exports threatened to make matters worse. The new SOE was meant to protect the industry against the recent surge in cheap imports from China, as well as other external geopolitical pressures. Yet not all Indonesians are cheering the new government venture, with some experts worrying that it may instead weaken private investment and suppress job creation."
Indonesia will establish a new state-owned enterprise under Danantara to revive its struggling textile and garment sector and to shield it from U.S. tariffs. Danantara will provide up to $6 billion to the SOE to deploy new technology and expand exports. The textile industry faces competition from China and Bangladesh and a proposed 19% U.S. tariff that could worsen its outlook. The SOE aims to counter cheap imports and geopolitical pressures. Some experts warn the SOE could deter private investment and suppress job creation. Danantara was created in February 2025 to directly manage SOEs and pursue faster economic growth. Textiles remain culturally significant, with traditional batik, ikat and songket, and only a third of garments sold domestically, with the rest exported.
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