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
President Prabowo Subianto visited former president and Indonesian Democratic Party of Struggle (PDI-P) chairwoman Megawati Soekarnoputri on the occasion of the Idul Fitri holiday. The meeting on April 7 marked an important rapprochement between the two figures that would define the country’s political dynamics in the future.
Nevertheless, the close encounter, which lasted 90 minutes, did not result in a specific agreement, although further follow-up could be expected.
The long-awaited meeting came after several rounds of lobbying between the PDI-P and Prabowo’s Gerindra Party elites. The two were expected to hold talks before Prabowo took office on Oct. 20 last year, with the hope that the PDI-P would join the grand ruling coalition.
Until today, the PDI-P is the only party that opts to stay out of the government, making it impossible for it to effectively engage the checks and balances mechanism.
Prabowo met Megawati at her residence on Jl. Teuku Umar in the upmarket Central Jakarta area of Menteng. Several PDI-P and Gerindra Party top executives were seen present at the big house, but did not take part in the Prabowo-Megawati conversation.
Prabowo has built a close relationship with Megawati following their collaboration in the 2009 presidential election. Back then Megawati ran for president, with Prabowo as her running mate. The pair lost to Susilo Bambang Yudhoyono, who partnered with Jusuf Kalla.
Despite the flopped presidential bid, Megawati and Prabowo continued their collaboration in the Jakarta election in 2012, which was won by Joko “Jokowi” Widodo of the PDI-P and his running mate Basuki “Ahok” Tjahaja Purnama of Gerindra.
Ties between the PDI-P and Gerindra began to sever after Megawati endorsed Jokowi’s presidential bid in 2014, who eventually beat Prabowo in the divisive, see-saw race. Jokowi prevailed in the rematch in 2019, but brought Prabowo into his government as defense minister.
The PDI-P labeled Jokowi as a traitor for supporting Prabowo, instead of Megawati’s choice of Ganjar Pranowo, in the 2024 presidential election, which Prabowo won. To cap the severed ties between the PDI-P and Jokowi, the party dismissed the former president early this year.
Both PDI-P and Gerindra elites, however, claim that ties between Prabowo and Megawati have remained well-maintained despite the rivalry in the presidential race.
Prabowo and Megawati each have their respective interests, as the former would need support from the PDI-P, which has never declared its clear political stance toward the Prabowo administration, while the latter has to ensure the PDI-P does not get troubled by parties that try to challenge her leadership.
The corruption case involving PDI-P secretary-general Hasto Kristiyanto, who has been arrested by the Corruption Eradication Commission (KPK), is a clear sign for the party to be prepared for any turbulence.
The PDI-P's interest in protecting Prabowo has never been greater, as the party's congress, originally scheduled for April this year, will decide the future of Megawati's leadership.
In addition, Jokowi, who has no political vehicle after having been closely connected to the Golkar Party and ProJo, the largest group of Jokowi’s supporters that has been rumored to be a political party, appreciated the meeting for the sake of the state’s interests.
Sufmi Dasco Ahmad, Gerindra’s executive chairman and House deputy speaker, stated that Prabowo has full independence to meet anyone, including Megawati, and would not need anyone’s permission, including Jokowi’s, to do so. Hence, Prabowo did not notify Jokowi in advance about his meeting with Megawati.
Eddy Soeparno, the National Mandate Party executive, is convinced that the Prabowo-Megawati meeting would signal the PDI-P's support without its direct involvement in Prabowo’s cabinet, the same stance as the NasDem, which has declared its support for Prabowo’s administration without having any of its representatives in the cabinet.
Puan Maharani, House Speaker and Megawati’s daughter, stated that Prabowo and Megawati would have follow-up meetings in the future.
