Sector
Industry
Indonesia's industrial sector encompasses diverse subsectors that play a significant role in the country’s gross domestic product (GDP). Notably, manufacturing contributed 16.30 percent of Indonesia’s total GDP in the second quarter of 2023, with key activities including the manufacturing of textiles, automotive, electronics, and food processing. During the same period, other subsectors also experienced growth, led by the metal, computer, electronic devices, optical, and electronic appliances industry, which grew by 17.32 percent. This was followed by growth in the basic metal industry by 11.49 percent, the transportation industry by 9.66 percent, the food and beverage (F&B) industry by 4.62 percent, and the paper and recording media industry by 4.50 percent.
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Industry
Indonesia's industrial sector encompasses diverse subsectors that play a significant role in the country’s gross domestic product (GDP). Notably, manufacturing contributed 16.30 percent of Indonesia’s total GDP in the second quarter of 2023, with key activities including the manufacturing of textiles, automotive, electronics, and food processing. During the same period, other subsectors also experienced growth, led by the metal, computer, electronic devices, optical, and electronic appliances industry, which grew by 17.32 percent. This was followed by growth in the basic metal industry by 11.49 percent, the transportation industry by 9.66 percent, the food and beverage (F&B) industry by 4.62 percent, and the paper and recording media industry by 4.50 percent.
Notably, the F&B industry stands out as the only non-mineral industry to have made the largest contribution to the national GDP at 38.61 percent in the first quarter of 2023, having generated US$1.1 billion from 2,226 projects through foreign direct investment (FDI) and Rp 26.72 trillion from 5,416 projects through domestic investment sources.
Indonesia’s massive industrial development has enabled the industrial sector to provide extensive employment opportunities, with over 19 million people employed in the sector, making it the largest workforce in Indonesia as of 2019. By 2024, the government aims to further increase employment in the sector to more than 20 million people.
Among all the subsectors, the non-oil and gas manufacturing industry has emerged as one of the most important in terms of employment, providing work opportunities for approximately 14.13 percent of the Indonesian labor force in 2022. Companies within this subsector are mostly concentrated on the island of Java. Additionally, the Riau Islands are known to have the highest average net wage for manufacturing workers in the country, with around Rp 5.55 million per month as of February 2023.
Furthermore, Indonesia's industrial sector presents promising opportunities for growth and development across various fronts, including Industry 4.0 transformation, adoption of sustainable practices, regional integration with Southeast Asia and Pacific actors, downstream manufacturing, and empowerment of small and medium enterprises (SMEs). Particularly concerning Industry 4.0 transformation, the government administers the integration of advanced technologies into the production process to improve efficiency and product quality. Additionally, efforts are underway to reduce production costs by placing cement, refined petroleum, automotive, and F&B at the forefront of entering Industry 4.0.
Moreover, the incoming administration has promised to bolster the downstream agenda, especially in the mining sector, with plans for 20 new smelters set to become operational between 2024 and 2025. The shift towards downstream mining products, such as bauxite, copper, and tin has the potential to increase their value, with added values reaching up to three to 180 times along the value chain.
Latest News
The Attorney General’s Office (AGO) has struck a significant agreement with major cellular service providers in Indonesia, granting it access to users’ private information for law enforcement purposes. While the reasons for the deal look convincing, the development raises serious concerns about potential violations of fundamental citizen rights and may conflict with a Constitutional Court ruling regarding surveillance and wiretapping.
The strategic agreement came on the heels of public scrutiny over the AGO in May, when Indonesian Military (TNI) personnel were deployed to secure prosecutors’ offices nationwide and ensure operational continuity.
On June 25, deputy attorney general for intelligence Reda Mantovani formalized the collaboration by signing a memorandum of understanding with PT Telekomunikasi Indonesia, PT Telekomunikasi Selular (Telkomsel), PT Indosat and PT XL Axiata. Reda explained the cooperation was vital for the intelligence division, supporting law enforcement through investigations, security operations and engagement initiatives. This includes installing and operating surveillance devices and providing telecommunications data records.
The AGO asserts that Article 30B of Law No. 11/2021, which amends Law No. 16/2004 on the prosecutor’s office, provides the legal basis for overseeing multimedia activities. Reda also claimed that this collaboration guaranteed the collected data and information were of indisputable quality and validity, meeting the A1 intelligence classification.
With Telkomsel remaining Indonesia’s largest mobile service provider with 159.9 million subscribers as of September 2024, followed by Indosat Ooredoo Hutchison (100.9 million) and XL Axiata (93.3 million), the memorandum has ignited significant privacy concerns. The AGO’s wiretapping authority lacks independent oversight, increasing the risk of abuse of power, especially since the prosecutorial service operates as an executive branch instrument under the current administration.
The law equips law enforcement agencies, the AGO, the police and the Corruption Eradication Commission (KPK), with surveillance power, but so far only the KPK has remained free of abuse. The eavesdropping authority has proved to help the KPK catch big names who previously enjoyed impunity.
There were also reports of alleged abuse of wiretapping power involving the police, as in the instances of arrest or phone hacking targeting government critics.
House of Representatives Speaker Puan Maharani, from the Indonesian Democratic Party of Struggle (PDI-P), underscored the crucial balance needed between law enforcement efforts and protecting citizens’ constitutional rights. She further emphasized the importance of building public trust in legal institutions by ensuring adherence to legal boundaries.
In a similar tone, Nasir Djamil, a member of House Commission III overseeing the AGO, questioned the memorandum, recalling Constitutional Court Decision No. 5/PUU-VIII/2010, which mandates that surveillance and wiretapping must be governed by a specific law. He noted that despite multiple invitations to stakeholders, a proposed Wiretapping Law had yet to enter formal legislative discussions.
Moreover, this agreement threatens individuals’ personal data rights, which are legally protected by the principle of data subject consent. This means the AGO could access private data held by telecommunications companies under the pretext of law enforcement.
With approximately 300 million mobile users in Indonesia potentially affected, there is a real risk of mass surveillance being conducted without the tight regulations, court permission and limited timeframes that such actions should legally require.
