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The popularity of the hijab and Muslim fashion in Indonesia has been on the rise. A growing number of Indonesian women are wearing veil or headscarf in the world’s most populous Muslim majority market. Muslimwear has evolved from a religious and cultural movement to a fashion-savvy trend and booming industry.
The increased demand for Islamic clothing has encouraged the growth of the domestic Muslim fashion industry. In a relatively short time, muslimwear has become an important segment of the national textile industry (See Indonesia's Textile Industry – Testing Times Upstream). The sector has been transformed from its origins in home industries and small and medium enterprises (SMEs) and to large-scale manufacturing today.
Before the New Order era, Muslim women in Indonesia used long scarves to loosely cover their hair. From the 1980s, the jilbab or veil that tightly covers the hair was introduced to Indonesia. However, the use of the veil in public schools and government institutions was temporarily restricted by the Soeharto administration; although this did not discourage the majority of Indonesian Muslims from observing what they felt was their religious duty. The rise in the number of women observing the hijab in Indonesia has given birth to a lucrative muslimwear industry. Since early 2000, the sector has been growing rapidly as more young, urban women adhere to the hijab. This new fashion-councious segment demanded Muslim clothing that does more than just cover the hair and body, but also feature appealing styles and designs.
To cater to this demand, a host of young, creative designers who were capable of designing fashionable and on trend Muslim fashion emerged. This included rising stars such as Ms Dian Pelangi who was named one of the 500 most influential persons in the fashion industry by UK-based magazine, Business of Fashion. In fact, a number of established figures in the local fashion industry such as Mr Itang Yunasz have moved into muslimwear design and have capitalised on this rapidly growing niche market. Islamic fashion in Indonesia is also no longer focused solely on female customers but is also targeting male customers with the launch of koko or taqwa clothing lines.
The hijab market in Indonesia can be divided into three segments; firstly, a simple and practical veil used by 60-70% of Indonesian women. This veil is sold in various colours and models at affordable prices; secondly, the shariah veil which is used by 10% of Indonesian women. This type of veil is longer and is available in conservative colours such as white, black and brown; lastly, the fashionable veil used by urban, middle-class women that come in a variety of colours and styles and is sold at premium prices.
The Indonesian hijab market is still dominated by the practical and simple veil model which retails for under 50,000 IDR for a headscarf and less than 200,000 IDR for a dress. Although the profit margin is low, its demand and sales volume are high which makes this segment highly-lucrative. In contrast, the fashionable hijab which is sold above the 200,000 IDR price point and even into the millions of IDR is relatively limited but offers high profit margins. The market opportunities for hijab products in Indonesia are still wide open, both for low-end as well as high-end segments due to the relatively low number of players in this sector. In addition, the demand for high-end, fashionable hijab products is not only limited to the domestic market but also the regional and international markets given Indonesia’s growing prominence as an Islamic fashion hub.
Muslimwear stores can also be found in traditional markets as well as modern malls with Tanah Abang and Thamrin City gradually becoming the wholesale centre of Islamic clothing, attracting shop owners from around the country sourcing the latest items to sell in their stores. There are also boutique stores that aim at high-end consumers with brands such as Shafira, Zara, and Rabbani, among others. Furthermore, as the number of internet users increases in Indonesia, e-commerce sites offering Islamic wear have mushroomed with brands such as Zoya, Hijup, Hijabenka and Elhijab, offering diverse product portfolios for all consumer segments. Online marketing coupled with reseller and dropship schemes offer lower operating costs and can reach a wider audience due to the absence of geographical constraints. As such, muslimwear has become a highly sought-after commodity and a rapidly growing industry in Indonesia.
Data from the Indonesian Ministry of Industry revealed that around 80% of muslimwear products are sold in the domestic market, while the remaining 20% are exported (See Indonesia’s Garment and Textile Sector; Short Term Woes). In 2015, Indonesia's Muslim fashion exports reached $4.57 billion USD or around 58.5 trillion IDR. The figure is lower than that in 2014 of $4.63 billion USD with an export growth trend of 2.30%.
According to data from BPS (2013), the number of companies engaged in the fashion sector reached 1,107,955 units. Around 10% of them are large companies, 20% are medium enterprises and 70% are small enterprises (See Indonesia SMEs: Increased Government Support to Overcome Challenges). Of the 750,000 SMEs engaged in the clothing sector in Indonesia, around 30% of them are muslimwear producers, with large companies occupying 40%, while small and medium enterprises each occupy 30% respectively of the market.
Hijup, for example, now has 200 designers and growing customer base in 100 countries. With a five-fold annual turnover growth, the startup recently received seed funding from renowned global investors which included 500 Startups, Fenox Venture Capital, and Skystar Capital and has been included in the Google Developers Launchpad Accelerator programme. In February 2016, by invitation from the British Council, Hijup showcased its products at London Fashion Week.
Other rapidly growing muslimwear retailer, Elhijab, now has more than 184 retail outlets across Indonesia. Through the development of its e-commerce platform, Elhijab has managed to build its brand nationally and internationally and tap into export markets in Western Europe including the UK and France as well as the United States and the Middle East.
Going forward, Indonesia's muslimwear exports will be focused on unsaturated markets such as the United States, Japan, Germany, South Korea, UK, Australia, Canada, UAE, Belgium, and China.
Despite making significant progress, Indonesia's muslimwear industry still faces a number of challenges. Its product competitiveness is still low due to poor efficiency and low scalability. Other challenges faced by the country's Islamic clothing industry include the lack of financing (See Indonesia's Microfinance Sector Overview: Key Component for Sustainable Growth), cultural preferences, and the need to maintain the balance between upholding Islamic principles and following the latest global fashion trends.
Meanwhile, the major competitors for high-end hijab products are manufacturers from ASEAN countries, especially Malaysia and Thailand (See Indonesia and the ASEAN Economic Community – Ready for Regional Integration?). The latter, as one of the main textile producers in Southeast Asia, aims to make Bangkok a hub for muslimwear industry. Thailand’s Islamic fashíon industry is mostly located in the Muslim dominated southern provinces, with around 80% of its products exported to Malaysia before they are re-exported to various countries with an annual turnover of around $28 million USD.
Malaysia is Indonesia’s biggest competitor in the fashionable hijab segment. Hijab producers and retailers in the country have already had a head start in terms of marketing by utilising e-commerce and social media platforms; particularly Instagram, to market their products. One of the Malaysian hijab brands that has successfully gone global is Naelofar. In 2015, the family-owned company managed to record sales of $11.8 million USD. Another leading brand is Mimpikita which was invited to shòwcase its products at London Fashion Week in 2015.
The main competitor for low-end hijab products is China which offers cheaper products (See What China’s Slowdown Means for Indonesia: A Trade Perspective). This is critical because domestic customers tend to prioritise price over quality which prompts hijab sellers to turn to reselling Chinese products instead of helping develop local products. Moreover, the hijab’s growing popularity in Indonesia and other countries has lured retailers and designers from non-Muslim countries to launch muslimwear lines themselves. The Japanese retailer, Uniqlo, for instance, hired a popular Muslim fashion blogger, Ms Hana Tajima, to design a Muslim clothing line for their brand.
In September, British model Ms Mariah Idrissi became the first woman wearing a headscarf to star in a commercial for H&M; the world’s second-biggest clothing retailer. In 2014, DKNY launched a Ramadan collection and other western brands such as Tommy Hilfiger and Mango have followed suit by selling Muslim clothing during Ramadan.
According to a report by Thomson Reuters and Dinar Standard in the Global Islamic Economy Report, the world’s 1.6 billion Muslim consumers spent $266 billion USD on clothing in 2013, and are projected to spend $484 billion USD by 2019. Muslim countries with the highest clothing consumption are Turkey at $25 billion USD, followed by Iran at $21 billion USD, Indonesia at $17 billion USD, Egypt at $16 billion USD, and Saudi Arabia at $15 billion USD, based on 2012 data. This excluded Muslims in Western Europe (Germany, France, UK) and North America who collectively spent an estimated $21 billion USD on clothing and footwear in 2012. Collectively, the Muslim clothing consumer market is only second after the largest market in the world – the United States, with $494 billion USD in spending.
Meanwhile, the biggest clothing producers and exporters within the Organisation of Islamic Cooperation are Bangladesh, Turkey, Indonesia, Morocco, and Pakistan. Thus far, despite its huge market potential, there is no single Muslim clothing brand that has been capable of becoming a global player due to market fragmentation and differing cultural preferences.
Indonesia has set a target to become a global Muslim fashion capital by 2020. According to the Deputy Minister of Cooperatives and SMEs, Ms Emilia Suhaimi, the target is attainable since Indonesian hijabs are unique and more diverse compared to those from other countries. Moreover, the industry is backed by an ample supply of creative human resources and a rich cultural heritage (See Indonesia's Creative Economy & Heritage Products – A Wealth of Opportunities). To show its support, the Indonesian government is considering assigning a standard HS code for Islamic wear.
Indonesia has routinely organised annual Islamic fashion shows to help promote the domestic muslimwear industry at the international level. These events include Indonesian Muslim Fashion Week, the International Indonesian Islamic Fashion Fair, and Muslim Fashion Festival Indonesia 2016. Moreover, the Indonesian government also encourages local Muslim fashion designers to participate in overseas exhibitions to introduce their brands to global customers. These efforts combined make Indonesia a firm contender for becoming a global Islamic fashion centre. The country’s diverse hijab designs also places it in a strong position for garnering international appeal at this key time when Islamic fashion is growing at a rapid pace both in emerging markets as well as among Muslim communities in advanced economies.
Global Business Guide Indonesia - 2016
Contribution to GDP: 18% (2015)
Sector Growth: 5.5% (yoy, 2015)
Number Employed in the Sector: 16 million (2016)
Highest Minimum Wage by Province: 3,350,000 IDR/month (DKI Jakarta)
Lowest Minimum Wage by Province: 1,631,245 IDR/month (West Nusa Tenggara)
Main Areas: Automotive, Electronics, Textile & Garment, Footwear, Food & Beverages, Metal Products, Chemicals.
Main Export Markets: USA, Japan, China, Turkey, South Korea, Germany, Singapore, Thailand, Philippines, Saudi Arabia, Malaysia.
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