On November 24, 2025, Mochammad Firman Hidayat, a member of Indonesia's National Economic Committee (DEN), revealed at the Indonesia Economic Outlook forum that 27 labor-intensive enterprises from China and Vietnam plan to move their factories to Java, Indonesia, primarily focusing on footwear and horticulture-related industries.

The immediate reason behind this shift is the tariff gap:

Under the current round of "Trump Reciprocal Tariffs," the U.S. imposes about a 19% tariff on Indonesian goods, compared to 20% on Vietnamese products. This differential has turned production location into a recalculated cost-benefit question.

According to DEN estimates, if all 27 factories are established and begin production as planned, Indonesia could add around 120,000 new jobs. Many of these projects are expected to locate in low-wage manufacturing hubs like Central Java (where the 2025 minimum wage is approximately $135/month, lower than Vietnam’s major manufacturing regions).

For brands, this move shifts some production from "high-tariff + high-cost" China and Vietnam to "lower-tariff + cheaper labor" Indonesia. For Indonesia, this is an investment window opened by others’ tariff burdens—but the window won’t stay open forever. How many orders and jobs materialize depends on how quickly Indonesia can resolve long-standing issues like approvals, land acquisition, and worker training.

Firman noted that most locals in Central Java are farmers, making it challenging to train enough sewing and stitching workers from scratch and raise productivity to "at least near Vietnam’s levels." Companies aren’t unwilling to relocate but worry that prolonged training periods and high turnover rates could erode tariff advantages.

Firman bluntly stated that to absorb these 27 factories, Indonesia must handle the old problems:

Speeding up permits, reducing import restrictions and TKDN (local content requirements), or else its investment openness will continue lagging behind Vietnam and India. As for land acquisition and customs efficiency—long-standing pain points—he didn’t list them one by one, but in reality, they’re likely on the checklist.