Shenzhen-listed textile firm’s Indonesia investment fuels hopes of silver lining in US-China trade war

Jiangsu Lianfa Textile is pumping at least US$350 million in a Central Java factory, sparking optimism that Chinese firms will choose Indonesia as they shift their production centres to avoid trade tariffs

Textile exports contributed US$13.8 billion last year, and the government is aiming to grow exports to US$15 billion for the US, Japanese and European markets

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A textile worker in Kendal Industrial Park in Central Java, Indonesia. Photo: Facebook

Published: 5:55pm, 4 Apr 2019Updated: 10:37pm, 4 Apr 2019

A China company’s bid to set up a textile manufacturing plant in Indonesia’s Central Java province is raising hopes the Southeast Asian country can benefit from Chinese firms seeking to shift their production centres amid the ongoing US-China trade war.

Jiangsu Lianfa Textile, listed on the Shenzhen Stock Exchange, will launch its factory next year with an investment of between 5 and 6 trillion rupiah (US$350 million and US$422 million), said Ade Sudrajat, chairman of the Indonesian Textile Association (API).

The factory will produce yarn for shirt-making, reducing the cost of yarn imports by US$1 billion for Indonesian shirtmakers and helping them produce final goods such as fabrics and shirts more speedily for the US market, he said.

“There isn’t a single Chinese investor that has pumped money into Indonesia in the last one to two year … and we hope this planned shift by the Chinese textile company is a sign that more will come to Indonesia,” Sudrajat said. “Our buyers in the US will benefit because the shipment processes for materials will be shorter and faster.”

Textile exports contributed US$13.8 billion last year, or about 2 per cent of Indonesia’s GDP. Photo: Reuters

Textile exports contributed US$13.8 billion last year, or about 2 per cent of Indonesia’s GDP, and the Industry Ministry said close to 3 million new jobs were created. Its aim is to grow textiles exports this year to US$15 billion for the US, Japanese and European markets.