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 80th anniversary of Indonesian independence approaches, a surprising symbol of nationalist pride has emerged. Instead of displaying the historic Red and White flag, a nationwide grassroots movement has citizens waving the flag of a fictional pirate group from the famous Japanese manga and anime series One Piece.
The movement began with a viral video of truck drivers flying the flag and has since gained momentum, with more and more people buying the flag and joining in. Houses that would typically be decorated with the national flag are now displaying the flag of the Straw Hat Pirates.
For context, Eiichiro Oda’s best-selling series One Piece follows the adventures of a young pirate named Monkey D. Luffy, who is seeking freedom and his ultimate goal to become the Pirate King. His main adversary is the World Government, a corrupt totalitarian regime. The show centers on the inherent tension between Luffy’s Straw Hat Pirates and the World Government, and the villains are often portrayed as evil state agents serving the regime’s interests at the expense of innocent civilians.
The flag itself is a Jolly Roger wearing a straw hat, the protagonist’s iconic headgear. Much like in the series, the Straw Hat Pirates flag represents more than just a presence. It is a symbol of resistance against the draconian realities faced by those disenfranchised by the ruling elite. It is a sign of fatigue and weariness with the growing social inequalities people face every day.
Amid economic uncertainty, job insecurity, and the decay of civil liberties, Indonesians have taken a creative approach to express their discontent. While the sociopolitical undertones are clear, government officials have reinforced the repressive rhetoric that the flag bearers criticize.
As the movement went viral, Deputy House Speaker Sufmi Dasco Ahmad denounced the phenomenon, saying that displaying the Straw Hat Pirates flag was a threat to national security and a systemic effort by third parties to endanger the country's sovereignty and unity. Calls for a nationwide crackdown ensued, and many officials from the national and to provincial levels moved to prohibit the flag’s use in the lead-up to Independence Day.
After realizing the legislature’s embarrassing overreach, State Secretary Prasetyo Hadi affirmed that President Prabowo Subianto had no issue with the flag being hoisted as a form of expression, if it did not intend to divide the country.
Regardless of the legality of displaying a fictional flag, the government’s fearmongering over concerns of sovereignty has begun to ring hollow, especially considering its recent actions on the global stage. In the same breath that officials have denounced the One Piece flags as foreign intrusion, the Prabowo administration has opened the country to external influence.
For all his iron-fisted rhetoric at home, President Prabowo has proven remarkably soft abroad. The recent trade framework deal with the United States, which reduced the country’s tariff hit from 32 to 19 percent, was publicly scrutinized over concerns that the President had given up too much in his efforts to find a resolution. The complete elimination of tariff and nontariff barriers now places vulnerable domestic industries at risk, while allowing the transfer of Indonesians’ personal data to US servers has raised urgent questions about digital sovereignty.
It’s not just foreign influence that exposes the hollowness of the government’s sovereignty rhetoric, but also the growing mockery of legal institutions at home. The recent amnesty President Prabowo granted to dismiss the bribery charges against Hasto Kristiyanto, the former secretary-general the Indonesian Democratic Party of Struggle (PDI-P), which has been seen as a move to make amends with the regime’s only de facto opposition party, is a testament to the state of judicial independence in the country.
The irony deepens with the fact that Vice President Gibran Rakabuming Raka was spotted wearing a Straw Hat Pirates pin during their 2024 election campaign. What the current administration now casts as subversive was once appropriated as a tool to gain an electoral boost.
As with the other movements that have cropped up in the past year, such as the #KaburAjaDulu (Just Flee First) and #IndonesiaGelap (Dark Indonesia), President Prabowo and his regime have also mocked the One Piece protesters for supposedly acting as foreign agents. But perhaps the threat to sovereignty is only real when the ruling elite feels threatened by their own people. The rest, it seems, can be negotiated away.