According to safeguardglobal.com, Indonesia contributes 1.4% to global manufacturing products, securing its position among the top ten contributors. This prestigious position marks a significant climb, as just four years ago, Indonesia was ranked 16th.

"This is a remarkable achievement as we belong to the top ten this year. Indonesia stands as the largest manufacturing powerhouse in ASEAN," stated Minister of Industry Agus Gumiwang Kartasasmita in Jakarta on Thursday, 21 December 2023.

The improved ranking signifies that the manufacturing sector in Indonesia has a multiplier effect on other sectors. The output from the industry not only boosts the transportation sector but also has a positive impact on energy, agriculture, plantations, and maritime sectors, which serve as sources of raw materials and production inputs for the manufacturing sector.

Indonesia's position in the global manufacturing arena is strengthened by the continuous increase in industrial output from 2020 to September 2023. In 2020, the industrial output value was recorded at US$210.4 billion, rising to US$228.32 billion in 2021 and increasing to US$241.87 billion in 2022. Meanwhile, as of September 2023, the industrial output value has reached approximately US$192.54 billion.

Enhanced industrial sector competitiveness in Indonesia is further bolstered by realized investments from Domestic Direct Investment (PMDN) and Foreign Direct Investment (PMA). Manufacturing sector continues investment continues to grow, from Rp213.4 trillion in 2020 to Rp307.6 trillion in 2021, and reaching Rp457.6 trillion in 2022.

Investments in the manufacturing sector from January to September 2023 have already reached Rp413 trillion.

Products from the manufacturing industry have also successfully penetrated the export market, as indicated by the dominance of the manufacturing industry in Indonesia's total exports. Manufacturing industry exports, which were recorded at US$131.09 billion in 2020, increased to US$177.2 billion in 2021. In 2022, the export figure for this sector reached US$206.06 billion, showing a 16.29% increase from the previous year. From January to November 2023, the figure reached US$171.23 billion.

The productivity of the manufacturing sector has also created more job opportunities. During the COVID-19 pandemic, the number of workers in this sector was 17.49 million, gradually increasing to 18.19 million in 2021 and 18.90 million in 2022. The latest data from the August 2023 National Labor Force Survey (Sakernas) shows that the number of workers in the non-oil and gas manufacturing sector is 19.29 million. Indonesia's Manufacturing Purchasing Manager's Index (PMI), which has been in the expansion phase for 27 consecutive months, reflects the stable condition of Indonesia's manufacturing sector. Only two countries in the world, India and Indonesia, share this position.

The government is promoting the spirit of industrial downstreaming domestically, a crucial factor influencing Indonesia's economic resilience and growth. The industrial downstreaming policy focuses on three sectors: agro-based industries, mining and mineral resources, and oil and gas, including coal.

"Through this policy, our abundant resources will not only be extracted and exported in raw form but will also be encouraged to be processed, creating thousands of derivative industries that enhance added value," said Agus.

Other efforts to maintain the productivity of the industrial sector include adding commodities to the commodity balance. This ensures the supply of raw and auxiliary materials, supporting added value and downstreaming domestically.

The government also ensures the smooth implementation of the Specific Natural Gas Price (HGBT) policy for the industry, as this policy has proven to increase industrial efficiency, especially in operational costs. Additionally, efforts are intensified to increase the use of domestic products (P3DN).

The Ministry of Industry is also implementing programs such as education and vocational training programs, the Making Indonesia 4.0 program, value-added and industrial competitiveness programs, and the restructuring of machinery and industrial equipment for industrial revitalization.

Writer: Eri Sutrisno
Editors: Ratna Nuraini/Elvira Inda Sari/Siti Chodijah
Translator: Irvina Falah