Indonesia continues to be a leading apparel and footwear sourcing destination thanks to the country’s vertical capabilities along with its highly skilled workforce. As brands look to diversify sourcing strategies, the country also benefits from strong ties with key export partners, expanding market access and a growing reputation for operational reliability.
Indonesia is ranked the fifth largest apparel exporter to the U.S. and the third for footwear. While goods from the country are subjected to a 10% tariff, that represents a slight advantage over the bulk of U.S. trading partners, many of which have faced Section 301 investigations, resulting in 12.5% tariffs. Additionally, under the Canada-Indonesia Comprehensive Economic Partnership, tariffs on apparel and footwear will be phased out over the next 10 to 15 years, respectively. The country is also on the cusp of signing an agreement with the EU that would eliminate tariffs on apparel and footwear, starting in 2027.
With these tailwinds, Indonesia is positioned for even more attention from apparel brands. In the newly released report “Indonesia: An Overview of Social Compliance,” facility-based social compliance certification organization WRAP (Worldwide Responsible Accredited Production) breaks down how the country compares to its competitors, the key issues it still needs to address and how it should go about taking corrective action, where needed.
WRAP uses 12 principles to assess the working conditions in production facilities around the world as they relate to factors like forced labor, child labor and working hours as well as health and safety. During annual audits, participating facilities receive either a recommendation for certification or a corrective action plan (CAP) aligned with each criterion.
Of the 209 on-site factory assessments thus far in 2025, 24% resulted in non-compliances in need of a CAP. This was a positive outcome given that WRAP’s overall CAP to audit ratio is 37% this year. Moreover, the rate of non-compliances for Indonesia decreased by 28%, even as the number of audits surged.
Year on year WRAP findings paint a picture of a country striving toward continuous compliance improvement. Digging into the details, WRAP highlighted the areas in which Indonesia must take further action. Most documented issues in Indonesian factories fell under Principle 8, Health and Safety, representing a total of 63% of all non-compliances. The top categories under this principle that prompted corrective action plans were the use and access to emergency exits, lack of machine safety and warnings in the local language, and the failure to make first aid supplies available.
Twelve percent of non-compliances fell under Principle 12, which focuses on security. This principle focuses on the guidelines mandated by the U.S. Customs and Border Protection (CBP), which focuses on corporate, transportation and individuals’ security. The top categories under this principle that needed remediation were cybersecurity training as well as annual risk assessments, which help identify weaknesses and vulnerabilities.
Finally, 11% of non-compliances in 2025 were categorized under Principle 2, Prohibition of Forced Labor. The major issue identified under Principle 2 relates to contract terms that do not meet legal requirements, thereby opening operations up to potentially abusive working conditions.
Overall, the WRAP report highlights Indonesia’s generally “good social compliance record” and indicates the “clear progress” the country has made in remediations and long-term improvements.
In conclusion, the report stated: “While continued attention to labor practices—particularly around contract management—is essential to mitigate compliance risks, the country’s positive trade stance, improving supplier performance, and adaptable cost structure reinforce its long-term attractiveness for global buyers seeking both value and reliability.”
Download the report here for detailed findings and suggestions for improvement.
