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

November 14, 2025

President Prabowo Subianto 's flagship free nutritious meal program has hit a critical juncture. Launched with the ambition of feeding millions and cementing his populist image, the program is now marred by reports of food poisoning, poor governance and slow budget absorption. In response, Prabowo has formed a high-level coordinating team to rescue the initiative before it collapses under its own weight.

The new team is designed to tighten oversight and restore public confidence after a string of incidents, including more than 8,000 reported food poisoning cases and allegations of mismanagement in the field. Without swift reform, the government risks missing its ambitious target of reaching 82.9 million beneficiaries next year, despite allocating a massive Rp 268 trillion (US$16.06 billion) in the 2026 budget.

The coordinating team is chaired by Coordinating Food Minister Zulkifli “Zulhas” Hasan and includes representatives from 17 ministries and agencies. Yet, the daily operations will be led by Nanik S. Deang, one of Prabowo's closest confidants, who serves as executive director. Nanik is also deputy chair of the National Nutrition Agency (BGN), the main implementing body for the free meals program.

A former journalist and longtime member of Prabowo's campaign team, Nanik has no formal background in nutrition or food security. Her rapid rise from serving as deputy head of the Poverty Eradication Agency and independent commissioner at Pertamina to her current position underscores how political loyalty continues to shape key appointments in Prabowo's administration.

Under the new structure, the coordinating team will oversee the synchronization, monitoring and evaluation of 7,477 nutrition food supply centers (SPPG) operating across 38 provinces and 509 regencies. These centers form the backbone of the program's food logistics system, linking local farmers and food suppliers to schools and communities.

Prabowo recently touted the program's progress, claiming the government had distributed 1.4 billion meal portions to 36.2 million recipients. He downplayed the food poisoning reports, noting that the incidents represented "only 0.00017 percent" of total distributions. Critics, however, quickly pushed back. Reducing a public health issue to fractions, they argued, trivializes what should be treated as a serious failure of oversight. Each sick child reflects a breakdown in quality control and accountability. The creation of the coordinating team may be an acknowledgment of those concerns.

The coordination team lacks representatives from the military and the National Police. This stands out given Prabowo's reliance on security institutions to execute many of his policies, including the free meals program. Many SPPGs are owned by military and police-linked entities, raising long-standing suspicions that the program has doubled as a tool for distributing political and financial rewards to different factions.

Governance shortcomings have been a recurring theme in the program's rollout. The free meals program currently lacks a solid regulatory foundation, making coordination between ministries and local governments uneven at best. Zulhas said one of the team's first tasks will be to draft a presidential decree to clearly define responsibilities and strengthen governance mechanisms. Critics have long warned that the program's top-down management style has alienated local governments that are essential to on-the-ground implementation.

The government appears to have taken that criticism to heart. The revised plan will involve local administrations more directly, alongside the newly established "Red and White" village cooperatives, an ambitious network that could reach up to 80,000 cooperatives nationwide. Greater decentralization of the program could improve both efficiency and accountability as the program scales up.

For now, though, the challenge remains enormous. Despite a Rp 71 trillion allocation for this year, the BGN managed to spend only about 30 percent of its budget by September. Poor coordination, weak local capacity and bureaucratic bottlenecks continue to hamper delivery, and all while public expectations soar.

Prabowo's free meal program was meant to embody his promise of a strong, caring state. But unless the new coordinating team can turn rhetoric into real reform, the initiative risks becoming yet a potentially case study of failure to deliver.

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