Textile Industry Receives Incentives, Apindo: Do Not Stop There!
The business community has responded positively to the government’s plan to provide several incentives to strengthen the textile and textile products (TPT) industry. However, the Indonesian Employers Association (Apindo) believes that fiscal incentives alone are not enough to boost the competitiveness of the national textile industry.
Shinta Widjaja Kamdani, Chairperson of Apindo, stated that several policies currently being reviewed by the government—ranging from Value Added Tax (VAT) facilities on the use of outsourced labour services and accelerated tax refunds to plans to revive tax holidays for the TPT industry—could assist businesses.
“The business community welcomes the government’s steps to strengthen the textile and textile products (TPT) industry, including the plan to provide VAT facilities on the use of outsourced labour, accelerated tax refunds, and the study of reintroducing tax holidays for the TPT industry,” Shinta told CNBC Indonesia on Monday (28/9/2026).
She noted that the TPT industry holds a strategic position as a labour-intensive sector that contributes to exports, employment, and serves as a national manufacturing base. “For us, this policy direction is important because TPT is a labour-intensive industry with a strategic role in exports, employment, and the strengthening of the national manufacturing base,” she added.
Nevertheless, Shinta warned that several of these facilities are still in the review stage. Therefore, their impact on the industry will depend heavily on the policy design and implementation. “However, it must be noted that some of these facilities are still being studied, so their effectiveness will depend on the design, targeting, ease of access, and certainty of implementation,” she said.
Previously, the Coordinating Minister for Economic Affairs, Airlangga Hartarto, revealed that the government is preparing several facilities for the textile industry. One of these is a VAT facility related to the use of labour under Fixed-Term Employment Agreements (PKWT). This policy was discussed in a limited meeting with President Prabermowo Subianto at the State Palace on 22 September 2026. Airlangga stated that the seasonal nature of orders in the textile and garment industry requires companies to have labour flexibility.
Shinta believes the VAT facility is relevant because the TPT industry faces dynamic demand patterns. When orders increase, companies need to expand production capacity and labour relatively quickly. In addition to the VAT facility, accelerated tax refunds are also considered vital for export-oriented TPT companies, as this policy directly affects cash flow and working capital requirements. Meanwhile, tax holidays and tax allowances are seen as tools to encourage new investment, re-investment, capacity expansion, and industrial modernisation.
Textile Industry Begins to Recover
Shinta stated that fiscal incentives should be part of a combination of policies to strengthen the TPT industry, rather than being the sole solution. She noted that the TPT industry is currently showing signs of recovery. According to Apindo data, the textile and apparel industry grew by 6.36% year-on-year in the second quarter of 2026.
“However, this is not the only solution to increase competitiveness. We also need to see that the TPT industry is currently showing a recovery momentum. In Q2-2026, the textile and apparel industry grew by 6.36% year-on-year,” she said.
According to Shinta, this momentum must be maintained through increased productivity, efficiency, investment, and competitiveness. Thus, the incentives provided should not merely increase fiscal benefits but also resolve the long-standing bottlenecks hindering the industry. “Therefore, the incentives needed by the industry are not necessarily large incentives, but targeted, easily accessible, certain, and truly effective in resolving the bottlenecks faced by companies,” said Shinta.
Old Machinery to Financing
One critical agenda is accelerating the modernisation of machinery and technology. Shinta stated that machinery renewal requires financing support with costs and tenures that match the investment characteristics of the TPT industry. This aligns with the government’s plan previously stated by the CEO of the Danantara Investment Management Agency, Rosan Roeslani. The government will encourage banks, particularly state-owned banks (Himbara), to resume providing financing to textile companies, including for the upgrading of old machinery.
Shinta noted that machinery modernisation is not just about increasing production capacity. “Machinery renewal is not only related to adding capacity, but also productivity, energy efficiency, product quality, the ability to meet standards, and the speed of fulfilling orders from global buyers,” she explained.
In addition to machinery, Apindo believes that strengthening the supply chain and the availability of raw materials are crucial factors for the competitiveness of the TPT industry. According to Shinta, the industry requires raw materials and intermediate goods with competitive prices, quality, and supply continuity. Therefore, the upstream industry and domestic supply chains need to be strengthened, particularly for raw materials that are economically competitive to develop domestically.
“Policy harmonisation from upstream to downstream is also important because TPT is a single, interconnected value chain,” she concluded.