Indonesia Launches $6B State-Owned Textile Firm to Counter Trump Tariffs and Foreign Competition

Indonesia is creating a new state-owned enterprise (SOE) under its sovereign wealth fund Danantara to revive its struggling textile sector, allocating up to $6 billion to boost technology and exports. Announced on January 14, 2026, the move aims to shield the industry from a proposed 19% U.S. tariff and rising competition from China, Bangladesh, Vietnam, and India. The textile sector, which exported $11.9 billion in 2024, faces eroding competitiveness due to high labor and energy costs—Indonesian wages are double those in Bangladesh. The collapse of textile giant Stritex in February 2025, which left 10,000 workers jobless, underscored systemic vulnerabilities. While experts acknowledge the SOE’s potential to address structural issues like outdated tech and weak upstream integration, critics warn it could crowd out private investment and harm SMEs and traditional weavers who lack scale advantages.