Value chain analysis Indonesia home decoration and home textiles

Because people in Europe, North America and East Asia are increasingly attentive to the way their home is decorated, home decoration (HD) and home textile (HT) are promising markets for Indonesia, the European Union as a whole being one of Indonesia’s main trading partners for those sectors. A global trend for these markets, worth billions of euros, is focused on quality products from natural materials. Indonesia indeed has a rich culture of traditional craftsmanship, reflected in its wood- and rattanware as well as its traditional textile industry. SMEs in the sector engage artisans and workers in rural areas of most islands. However, the majority of producers and exporters are located on Java and Bali. HD and HT are also fast-evolving and challenging markets. Thus, the export potential for SMEs is still uncertain.

Indonesian SMEs have a long history of producing a variety of goods from natural materials for export, especially wood and rattan furniture, home decoration items and accessories, etc. Handwoven textiles from the NTT islands represent a relatively new opportunity for home textile items, such as cushions covers, throws and spreads in the higher-end customer segment. Therefore, two value chains have been distinguished in this study: HD products made from small wood and fibres and HT products made from NTT handwoven textiles.

While the markets represented by the home decoration value chain (targeting in this study small furniture, baskets and boxes) are mature, they have been rapidly evolving in the past decades through changes in lifestyles and fashion in the importing countries, and have become highly competitive, two factors which make more efficient management skills and market approach necessary for the persistence and growth of SMEs. Since the 1960s, Indonesia has developed this VC as a flexible, complex and dense network of manufacturing companies, subcontractors and home workers with manufacturing hubs in Java (Cirebon, Surabaya and Yogyakarta). With the recent changes in market structure and dynamics, this network has proven less responsive to changes than before. Competitors such as China and Vietnam are taking important market shares, especially in the lower and mid-low end of the market. With its higher labour costs and skilled labour, Indonesia can only compete in the sector by targeting the higher ends of the market, through a combination of market intelligence, design efforts and sustainable partnership building within the national HD ecosystem of suppliers, subcontractors, manufacturers and designers.

Home textiles represent a more complex and diversified sector, from carpets to kitchen linen, bedwear to bathrobes. Difficult to apprehend as a whole, it is clearly also growing. With its rich and renowned traditions of handwoven textiles, traditionally worn as sarongs or displayed in ceremonial occasions, Indonesia can clearly claim market share in some of the subsectors in HT, due to the technical features and decorative value of its weaving sector. The Nusa Tenggara Timor islands, which are the focus of this VC study, is one of the poorest provinces in Indonesia, with malnutrition reported by the World Food Programme, especially in rural and remote areas. Highly rural, it depends mainly on agriculture, but urban income exceeds that of rural areas by around six times. As a counterpart of its traditional rural structure, the province is rich with living cultural patterns, especially in hand weaving, which is done exclusively by women.

Traditional handwoven textiles from NTT, the focus of the second VC of this study, are characterised by rich patterns, sophisticated techniques, and an increasing use of natural dyes and locally grown and hand-spun cotton. The patterns are diversified and characteristic of the diverse communities of Timor, Sumba, Flores, Alor and other islands of the NTT province. For a full century, those textiles were appreciated by amateurs and collectors, and purchased at a high price. European people, pioneered by the Dutch, represent a good share of those amateurs. The potential of those textiles for home decoration has been tapped since the 1920s, before HT was identified as a sector of the economy. Physical transformation of traditional sarongs was limited, and the product’s value was truly decorative rather than partially functional. The present HT market demands at least partial functionality in complement with decoration, and this sums up the challenges to the HT sector in NTT.