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.
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GEM Co., Ltd., a battery raw material processing and recycling company, plans to invest US$8 billion to develop the Indonesia Green Industrial Park in North Kalimantan. The company also targets to fill key positions for production facilities in Indonesia with local Indonesian talent.
GEM President Commissioner and founder Xu Kaihua stated that GEM plans to continue investing in the downstream side of the Indonesian mineral industry. Currently, GEM operates a nickel processing plant in Morowali through a joint venture called QMB. The next investment is the development of a basic industrial area in the form of IGIP in North Kalimantan.
The initial investment is estimated to cost US$2 billion (Rp32.52 trillion), which would be increased to the full US$8 billion (Rp130 trillion) in subsequent stages.
Xu claims that GEM's production facility in Morowali will enable Indonesia to refine low-calorie nickel and recycle cobalt. The technology is also expected to allow the industry in Morowali to produce mixed hydroxide precipitate (MHP), which can then be processed into one of the main ingredients for producting batteries.
"Previously, nickel in Indonesia could only [be used to]produce stainless steel. Now there is a stainless steel and NPI (nickel pig iron) overcapacity, therefore it is important to have a new direction for nickel processing production," he said at Institut Teknologi Bandung Jatinangor Campus in Sumedang Regency, West Java Province on May 24, 2025.
However, Xu said that the operational activities of GEM's factory in Indonesia have so far tended to be expensive. The main problem is the lack of availability of local talent who can fill key positions in the production facility.
"The absence of local talent means we have to bring in talent from China. This is very expensive and unsustainable. Therefore, we have been trying to encourage local talent to continue their studies in China since 2019," he explained.
However, training programs through postgraduate and doctoral education at universities in China are not enough to fill GEM's workforce needs. Xu then took the initiative to build laboratory facilities on the ITB Jatinagor Campus worth US$ 270 million (Rp4.39 trillion) to increase the capacity and speed of local talent training.