Can Indonesia Take Opportunity in Islamic

Fashion Industry Huge Market Gap?

By : T. MUHAMMAD SYUKRAN (1406512575)

POLICY BRIEF
stry Huge Market Gap ?
Magister of Planning and Public Policy, Faculty of Economy and Business, University Of Indonesia

Alongside a thriving Islamic economy with two billion

World Moslem Fashion
have more Industry?LICY
muslim population but the market is still lower
BRIEF
populations, there is growing demands for Islamic fashion than Turkey and United Arab Emirates (UAE).
apparels. Unfortunately, offerings have been limited, and,
there was no player dominantly share in the industry. So,
$45.0 $39.3
there is an opportunity for modern Islamic fashion brands to $40.0
$35.0
be showcased.1 $30.0 $24.9 $24.8
$25.0 $22.5
According to Thomson Reuters State of the Global Islamic $18.8 $18.2
$20.0 $16.8
$14.4 $12.7
$15.0 $9.5 $10.3 $9.8
Economy Report, data of year 2012 and 2014, shows that $10.0
$3.7 $4.1 $3.9
the modest fashion continues to grow. This report estimates $5.0
$0.0
global muslim consumer spending on clothing reach 2012 (US$ bill) 2013 (US$ bill) 2014 (US4 bill)

US$230 billion in 2014, making the muslim clothing

Turkey United Arab Emirates Indonesia India China
market 11% of global expenditure, the third largest
rank,with a grow rate of 4.1% compared to 2012. It’s a Picture 2. Top Muslim Clothing and Footwear Consumption Markets
2012 – 2014
huge industry. (Source: 2013,2014 and 2015 Thomson Reuters
State of the Global Islamic Economy Report)
USA
19%
2012 (US$ Bill) 2014 (US$ Bill)
China
Others 15% As the cost of labor in China increases, Indonesia become
$494 46% Global
Muslim more attractive sites for manufacturing textile and apparel
$400 Germa Market
India ny 11%
$310 4% 5%
(UN comtrade, 2011). On 2014, Indonesia clothing export
$221 $224 $230
growing up 12.9 % compared to 2010, with purpose mainly
$101 $99 $111 $96
to USA. But Only UAE, that islamic country become top 5
Indonesian clothing export.
USA China Global Muslim Germany Japan/India
Market

9,000.0
Picture 1. Muslim Market Size relatif to Global Top Clothing Market 7,801.5
8,000.0 7,502.1
2012 and 2014 7,451.1
(Source: 2013 and 2015 Thomson Reuters 7,000.0 7,304.7
6,598.1 Mainly
State of the Global Islamic Economy Report) 6,000.0
Countries
5,000.0
USA / 3,758.5 2014
4,000.0
Indonesian Advantage and Challenge 3,000.0 FOB
Grmn/ 548.5
2,000.0 Number
Indonesia is a country with the biggest muslim population Jpn / 645.2 UEA/204.8 2010-2014
1,000.0 UK/ 268.3
(US$ mill)
in the world. Therefore, islamic fashion have significant -
2010 2011 2012 2013 2014
implications and make Indonesia as top muslim clothing
and footwear consumption markets. Meanwhile, Indonesia Picture 3. Indonesia Clothing Exports 2010-2014 and
Mainly Countries 2014
1
(Source: National Beareau of Statistics, 2015)
EuroMonitor Research (2014): Is Islamic Fashion Apparel a Missed Opportunity?

1
 4,000,000 200,000
3,500,000 180,000
Domestic Market Share
3,000,000
160,000
Its challenge to strengthening domestic market share and 2,500,000
140,000
2,000,000
eliminate illegal imports product. Recent statistics 1,500,000 120,000

demonstrate that the domestic market is dominated by 1,000,000 100,000

2010 2011 2012 2013
illegal imports, which by the mid-2000s made up more than Labour (people) 3,750,197 3,787,450 3,809,339 3,838,756
Companies (Unit) 1,072,056 1,088,978 1,102,101 1,107,956
half the market share (Picture 4).
GDP Value Added
(ADHB)(Bill Rp) 127,817.5 147,503.2 164,538.3 181,570.3
On the basis of the clothing sold in Indonesia, it is safe to
assume that large proportion of the illegal imports come Picture 5. Contribution of Fashion Industry for Indonesia Economy
2010 - 2013
from China, although there are reports of imported Muslim (Source: Tourism and Economy Creative, Processed)
clothing, presumably from the Middle East, becoming a
significant trend.2
Indonesian in Global Muslim Markets
Export Share
2010 658 30 195
Indonesia not only countries to take this opportunity.
2009 557 25 238

2008 303 44 489

Turkey and UEA is main competitor that succeed build a

2007 260 88 862

modest fashion Industry. According to Thomson Reuters

2006 456 51 506

State of the Global Islamic Economy Report, show that
Turkey and UAE become a top countries clothing exports to
0 200 400 600 800 1000 1200
OIC Countries.4 Through graphic below show that 3
Domestic Product Legal Import Illegal Import countries has same similar positive export trends. Indonesia

Picture 4. Domestic Market Share of Garment Consumption exports reach US$ 479 million on 2014 while Turkey and
(Source: BPS, Ministry of Industry, API Compiled )
UAE make significant growth ± 20 % compared 2014 to
2012.
That indicates the domestic consumption made up only 60
to 70 per cent of total production. $3,000
$2,388
$2,500
$1,960
$2,000
Indonesian Passion to become Muslim Fashion Hub
$1,500 $1,185
Tourism and Creative Economy Ministry3, on Middle $987
$1,000
$413 $479
Action Planning Document 2015-2019 mentioned that $500

Indonesia goal to become a muslim fashion hubs by 2025. $0

2013 (US$ mill) 2014 (US$ mill)
Its based on big contribution of fashion industry toward
GDP. Turkey United Arab Emirates Indonesia

In 2013, creative industry contributed 7% of GDP, and

fashion itself had 2% share in Indonesian GDP. On the
Fashion front, it still is the biggest earning sector, taking in
27% of the creative industry, employs 3.8 million labor
with 1.1 million Small Medium Enterprise.
2
Adrian Vickers (2012) : Clothing Production In Indonesia:A Divided Industry
3
In Jokowi Era become Economi Creative Board
Picture 6. Top Countries Clothing Exports to OIC Countries (US$ Mill)
(Source: 2014 and 2015 Thomson Reuters
State of the Global Islamic Economy Report)
4
OIC : Organisation of Islamic Cooperation wich has 57 states. On this report,
besides OIC member, Thomson Reuters added 15 countries that representatives
muslim global population and economy.OIC Repesent more than $ 6.7 trillion
GDP (2014) and 1.7 billion population.

2
E-Commerce Potential Spend
Social Media and E-Commerce have been one of the key
drivers behind the rapid growth of this industry in the past
year. Turkey and UAE have make crucial step to keep up
with technological advantages with more spending t and
take of opportunities provided by digital platform.
United Arab
Emirates,
Turkey, $474 $428
capital of Islamic fashion, arts and design. Dubai has
recently launched "Dubai Design Centre" that will include
design schools and facilities for high brands designers that
would enhance promoting Dubai as a global fashion
destination5
Recommendation
Indonesia Government under coordination of Ministry of
Industry and Ministry of Trade colaboration with Economi
Creative Board need to improve exports with wider and

Indonesia, segmented market and also strengthening domestic fashion

$110 market mainly againts illegal import. The key segment of
global muslim fashion industry value chain are :
0 1 2 3 4
• Developing unique "modest" design
1
Picture 7. Muslim E-commerce Potential Spend (Clothing & Footwear) • Manufacturing Modest Fashion
2
(US$ mill, 2014)
(Source: 2014 and 2015 Thomson Reuters • Developing retail brands refer to E-Commerce focus
3 section
State of the Global Islamic Economy Report)
• Supporting Financing
4
What make Turkey and UAE become more efectively to • Marketing campaigns that consider unique muslim
5 values
take opportunity in muslim fashion industry? Both of 2
country focusses on the health of the modest fashion
ecosystem in a country that is relative to its size and
References
Adrian Vickers (2012) : Clothing Production In Indonesia: A Divided
includes its related social considerations. clothing Industry. Institution and Economics. Vol. 4, Oct. 2012, pp. 41-60.

manufacturers (specifically in women’s wear), distribution EuroMonitor Research. 2014. Is Islamic Fashion Apparel a Missed
Opportunity?
channels and designers are impacted too.
Indonesia Tourism and Creative Economy Ministry. 2014. Ekonomi
Kreatif : Kekuatan Baru Indonesia menuju 2025. Rencana Aksi
20.0 Jangka Menengah 2015-2019.
Sector Score
INA
Jung Choo, et al (2012) : Indonesia Muslim Clothing Consumption.
Journal of Arahe. Vol. 19, 2012.
27.6 Clothing Price Index &
TRK Labour Thomson Reuters. 2015. State of The Global Islamic Economy Report
2015/2016. Dubai, UAE.
29.7 Awareness (News &
Thomson Reuters. 2014. State of The Global Islamic Economy Report
UAE Events)
2014/2015. Dubai, UAE.

Supply Drivers relative Thomson Reuters. 2013. State of The Global Islamic Economy 2013
0 20 40 60 to Country Size Report. Dubai, UAE.

Suzzana El Massah (2015):Islamic Economy Option :SWOT Case Study

Picture 8. Indicator of Developed Modest Islamic Fashion Industry 2014 Analysis. Advances in Management & Applied Economics, vol. 5,
(Source: 2015 Thomson Reuters no.3, 2015, 63-84.
State of the Global Islamic Economy Report)
UN Commodity Trade Statistics Database. 2011.

Lesson Learned from UAE bps.go.id (access on 2 December 2015)

In January 2013, UAE launched the “Dubai: Capital of
Islamic Economy”. One of the pillars are: become the 5
Suzzana El Massah (2015):Islamic Economy Option :SWOT Case Study Analysis