The Development of Labour-intensive Garment Manufacturing in Indonesia

Indonesia's garment industry is a relatively young industry which only emerged as a factory activity around the mid-1970s. This was in response to an expanding domestic market and growing export opportunities. Before the 1970s garment production was largely conducted in small tailor shops all over the country. Since the mid-1980s to the Asian economic crisis of 1997-98 the garment industry has emerged as one of the most important export-orientated industries, generating increasing foreign exchange revenues and job opportunities for low-skilled, mostly women workers, because of its labour-intensive production process. After the Asian economic crisis, garment exports declined because of declining competitiveness in the face of strong competition from other developing countries, particularly China and Vietnam. Unfortunately, due to its relatively low international competitiveness, Indonesia's garment industry was not able to take full advantage of the expiry of the Multi-Fibre Arrangement in early 2005 to expand and increase its exports.