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
As the current administration continues its crackdown on financial crimes during President Prabowo Subianto 's first year in office, the corruption investigation targeting Victor Hartono, executive director of private tobacco giant PT Djarum, remains one of the most significant cases mounted by the Attorney General's Office (AGO).
Victor, the eldest son of tycoon Robert Budi Hartono, was placed under a travel ban by the Immigration and Corrections Ministry at the AGO's request. Effective from Nov. 14 until May 14, 2026, he appeared alongside four others subjected to the ban: former taxation director general Ken Dwijugiasteadi, junior tax auditor Karl Layman, tax consultant Heru Budijanto Prabowo and Bernadette Ning Dijah Prananingrum, head of the central tax office in Semarang, Central Java.
However, as of Nov. 29, the AGO has since revoked Victor's travel ban, citing his cooperation during questioning. The ban on the four other individuals remains in force. Despite the revocation, Victor continues to undergo legal scrutiny, with prosecutors emphasizing that the investigation into the alleged tax graft scheme is still ongoing.
The AGO's investigation centers on allegations that Victor colluded with tax officials at the Finance Ministry to manipulate Djarum's tax obligations between 2016 and 2020.
Because the alleged scheme occurred during Sri Mulyani Indrawati's tenure as finance minister, speculation has grown that she might be drawn into the case. However, AGO spokesman Anang Supriatna has downplayed that possibility, saying there are currently no plans to summon the former minister. Meanwhile, prosecutors have questioned Suryo Utomo, who replaced Ken as tax chief during their investigation in 2019.
The scheme reportedly operated through a rogue tax official who reduced the tax liabilities of selected companies. These reductions were arranged via explicit agreements between the official and corporate taxpayers, whose tax bill was adjusted illicitly in exchange for bribes. "There was compensation for reducing [the tax payment amount]," Anang confirmed.
The AGO has conducted raids at several locations including the residences of implicated tax officials, confiscating luxury cars, motorcycles and documents.
While prosecutors have yet to disclose the details of the case or publicly identify the companies that participated in the scheme, singling out Victor signals that his multitrillion-rupiah tobacco company is firmly under scrutiny. For an administration to train its sights on a member of the Hartono clan also demonstrates political will to confront the very top tier of the country's business elite.
The family, which had an estimated net worth of US$50.3 billion as of December 2024, is a majority shareholder of Bank Central Asia (BCA), the country's largest private bank in terms of assets, and controls a sprawling corporate empire spanning banking, tobacco, technology and real estate.
The sudden launch of the AGO investigation has also drawn the attention of observers questioning why Djarum is being targeted. If the case proceeds substantively, it will mark the second time the AGO has pursued a major tycoon: it is still seeking oil magnate Muhammad Riza Chalid, who remains a fugitive abroad, for his alleged role in the Rp 285 trillion (US$17 billion) fuel adulteration scandal involving state-owned energy giant Pertamina uncovered earlier this year.
Adding to the uncertainty is the timing. Just months ago, state asset fund Danantara launched its patriot bonds program. Offering a modest 2 percent yield, well below market rates, the program is aimed squarely at the country's wealthiest firms to help finance a flagship waste-to-energy plant.
While not mandatory, reports suggest Prabowo is pressuring conglomerates to participate or risk falling out of favor with his administration. Despite some initial hesitation, Djarum has emerged as one of the program's strongest supporters, reportedly buying over Rp 3 trillion in patriot bonds. This raises questions as to why the company now appears to be at odds with the AGO, a law enforcement body that is often criticized for its political selectivity.
It remains to be seen whether these and other details will be uncovered as the investigation continues.
