Government continues to improve the manufacturing sector in order to achieve higher economic growth rates and become an upper-middle income country. Minister of National Development Planning (Bappenas) Bambang Brojonegoro said, in order to compete with developed countries, Indonesia must build a sophisticated manufacturing industry sector so that economic growth becomes more optimal in the medium and long term.
Indonesia’s manufacturing sector is currently not diversified and only exports relatively few types of products, even though in 2018 it reached an investment realization of Rp222.3 trillion.
Meanwhile, Indonesia’s main exports are unprocessed natural resources and simple manufactured goods, very different from complex and high-value products exported by developed economies, such as machinery, chemicals or electronics.
The minister explained that Indonesian companies are indeed connected to the global value chain, but most are only suppliers of natural resources. In addition, the current portion of manufacturing employment in overall employment is lower compared to the economies of high-income Asia decades ago.
Reportedly, around 99% of manufacturing companies in Indonesia are micro or small, while the food sector is the largest employer in Indonesia, where in the food industry in 2018 7.69% and drinks reached 23.44%.