Southeast Asia has long been a critical hub for the global textile industry. As a region, it boasts a unique combination of favourable factors, including a strong workforce, cost-efficient production capabilities, and an expanding technological infrastructure. The region plays a vital role in both textile manufacturing and trade, producing a wide range of fabrics and garments for domestic markets and exports. This article provides a deep dive into the structure of the textile industry in Southeast Asia, exploring the major contributing countries, trends, forecasts, and special characteristics that shape the sector.
Southeast Asia's textile industry stands out not only for its size and economic importance but also for its dynamic and diverse structure. The region is a significant player in the global textile and garment manufacturing market, largely due to its low labour costs, abundant raw materials, and growing infrastructure in key countries. According to the World Trade Organization (WTO), Southeast Asia accounts for a considerable share of global textile exports, with China and India being the only countries that outpace the region in output.
The industry is highly fragmented, ranging from low-cost, mass-market garment production to more specialised high-tech textile manufacturing, such as functional fabrics for sportswear and medical textiles. The sector includes raw material suppliers (such as cotton and synthetic fibre producers), fabric manufacturers (like weavers and knitters), and garment producers, as well as a robust network of traders and exporters. Southeast Asia is particularly known for its strength in producing garments for the global retail market, with countries like Vietnam, Cambodia, and Bangladesh serving as major apparel suppliers to brands worldwide.
The market is characterised by a mix of multinational corporations, small and medium-sized enterprises (SMEs), and a significant informal sector, where production is often driven by low-cost, unskilled labour.
The textile industry in Southeast Asia is composed of several key players, each contributing uniquely to the regional and global market. Let’s examine the major countries contributing to this powerhouse industry: Vietnam, Indonesia, Thailand, and Cambodia.
Vietnam has emerged as one of the most significant textile producers in Southeast Asia. The textile and garment sector contributes substantially to the country’s GDP, with exports valued at around $40 billion in recent years. Vietnam’s textile sector accounts for roughly 16% of its total exports, and it is one of the world's largest exporters of textiles and garments.
Industry Structure: Vietnam’s textile industry benefits from a highly integrated supply chain. Local players provide raw materials such as yarn and fabric, while foreign companies bring in advanced machinery and technology. The country is known for its competitive pricing, skilled workforce, and proximity to key Asian markets.
Market Share and Growth Trend: Vietnam's market share in the global textile industry has grown rapidly, particularly due to preferential trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). These agreements have allowed Vietnam to increase its exports, especially to Europe and North America, and the country is projected to continue growing.
Special Features: One of Vietnam’s standout features is its relatively low labour costs compared to China, along with a government actively encouraging foreign investment. Moreover, Vietnam has made significant strides in adopting sustainability practices, particularly in textile recycling and eco-friendly fabric production, which is helping the country position itself as a sustainable manufacturing hub.
Indonesia is one of the most established textile industries in Southeast Asia. The country’s textile and apparel sector is a major contributor to its industrial output, accounting for approximately 4% of GDP and around 8% of its total exports.
Industry Structure: The Indonesian textile industry includes a wide range of activities, from fibre production to garment making. It is particularly strong in batik fabrics, synthetic textiles, and home textiles. The sector has historically relied on domestic cotton production but also imports raw materials such as polyester and cotton from neighbouring countries.
Market Trends and Forecast: The Indonesian textile sector has faced challenges, such as labour shortages and the rise of automation in neighbouring countries like Vietnam and Bangladesh. However, Indonesia is expected to benefit from the continuing trend of global fashion brands seeking to diversify their supply chains away from China.
Special Features: Indonesia’s strength lies in its diverse textile production capabilities and skilled workforce, including a growing emphasis on traditional textile craftsmanship like batik and ikat. The government has been focusing on improving its infrastructure and production processes, and there is an increasing trend toward incorporating advanced technologies, such as digital printing, in the industry.
Thailand has a strong and well-established textile industry, especially in the manufacturing of high-quality fabrics. Its textile sector is integral to its industrialisation strategy, accounting for around 3% of GDP and a similar share of the export market.
Industry Structure: Thailand’s textile industry is known for a wide range of production, including high-tech fabrics for automotive, healthcare, and sportswear markets. It has a growing synthetic fibre industry, with polyester being a particularly strong focus. The country is also home to a substantial garment manufacturing sector, which serves both the domestic and international markets.
Market Trends and Forecast: In recent years, Thailand has focused on increasing the value-added aspects of its textile production, moving away from traditional, low-cost garment production towards more high-end and specialised fabrics. The forecast suggests a growing emphasis on technology and innovation, with smart textiles and sustainable production methods likely to dominate in the coming years.
Special Features: Thailand’s textile industry is one of the most advanced in Southeast Asia, boasting significant technological innovation in textile machinery and fabric production. The country is also a major producer of environmentally friendly fabrics, catering to the increasing global demand for sustainable textiles. The presence of highly skilled workers, especially in textile engineering, contributes to the sector’s cutting-edge manufacturing capabilities.
Cambodia’s textile and garment sector has experienced rapid growth over the past two decades, becoming one of the largest contributors to its export market. The sector employs millions, especially women, and accounts for approximately 20% of the country’s GDP.
Industry Structure: Cambodia’s textile sector is largely centred on garment manufacturing, with fewer local mills than its regional peers. The majority of textiles are imported from neighbouring countries and sewn into garments for export. Cambodia primarily manufactures low-to-mid-range apparel, including garments for well-known global brands.
Market Trends and Forecast: Despite facing challenges such as rising labour costs and competition from countries like Bangladesh and Vietnam, Cambodia’s textile sector is poised for growth due to its preferential trade access under agreements like the Everything But Arms (EBA) initiative with the European Union. Cambodia is also focusing on improving the quality and range of textiles produced domestically, aiming to become a more vertically integrated textile hub.
Special Features: Cambodia’s low labour costs have been a major factor in its rapid expansion in the textile industry, making it an attractive destination for brands seeking affordable production. However, there is increasing pressure to improve working conditions and wages, and the country is beginning to focus on higher-quality manufacturing and more sustainable practices to maintain its competitiveness.
The textile industry in Southeast Asia is one of the most diverse and competitive globally. It is driven by low labour costs, increasing technological adoption, and evolving consumer preferences. The main contributing countries—Vietnam, Indonesia, Thailand, and Cambodia—each play a crucial role in shaping the region's textile sector. As the industry moves towards more sustainable and high-tech production, Southeast Asia is poised to continue expanding as a global textile powerhouse.
The future of the textile industry in Southeast Asia will likely be shaped by ongoing trends such as automation, sustainability, and the increasing demand for innovative fabrics. As global consumers continue to favour ethically produced, high-quality garments, Southeast Asia’s textile sector will need to adapt to these demands while maintaining its competitive edge in terms of production costs and capacity. Ultimately, Southeast Asia’s textile industry stands as a key player in the broader global textile market, poised to thrive amid the ongoing shifts in global supply chains.
