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fter sailing through stormy waters last year, the country'€™s non-oil and gas industry is forecast to bounce back in 2016 as the global economy is expected to grow faster and crude palm oil (CPO) prices are projected to start picking up.

However, estimated slow recovery in China'€™s economy and the implementation of the ASEAN Economic Community (AEC) may pose challenges to local industry.

The year 2016 is expected to mark the rebound of the country'€™s non-oil and gas or manufacturing industry, which saw 5.5 percent growth last year, a far cry from around 7 percent when the country'€™s economy peaked in 2011 and 2012.

Industry Minister Saleh Husin said recently that the local manufacturing industry would grow stronger in 2016 following improved global economic growth. '€œThere is a tendency for a rise [in industrial growth] next year,'€ he said.

Bank Indonesia (BI) deputy governor Mirza Adityaswara said previously that significant industrial growth would likely occur in the second semester of 2016 when China'€™s economy was expected to stabilize.

The International Monetary Fund (IMF) has estimated that China'€™s economy will grow by 6.3 percent in 2016, compared to a projected 6.8 percent last year. The global economy, meanwhile, is forecast to grow 3.6 percent in 2016 from 3.1 percent last year, mostly driven by a surge from developing nations such as India.

China has until now been one of Indonesia'€™s largest export destinations, including for commodities and manufactured products such as textile and footwear.

'€œFor Indonesia alone, we foresee better economic conditions in 2016, as there is certainty with regard to the US Federal Reserve rate and economic stimulus packages are at work,'€ Mirza said.

The government, however, had to make sure that all stimulus and deregulation packages were implemented not only by the central government but also local administrations, he added.

In another development, CPO prices are expected to trade as high as US$700 a ton by mid-2016 due to the prolonged El Niño weather phenomenon and more palm-oil based biodiesel usage in Indonesia, which is the world'€™s largest palm oil producer, according to agriculture business consulting firm LMC International.

While the government and analysts have agreed that next year would be positive for the country'€™s manufacturing industry, the two parties hold different stances on how much the industry will grow.

The Industry Ministry estimates the country'€™s manufacturing industry will grow by around 5.7 to 6.1 percent next year with an assumption that most of the government'€™s stimulus packages launched last year will start having a positive impact on industrial growth.

Throughout September to December last year, the government issued a total of eight economic packages, ranging from deregulations to tax incentives.

The ministry has forecast that the strongest growth will be recorded by pharmaceutical and food-beverages sectors.

Saleh implied that stronger consumer purchasing power and the national health insurance (JKN) would become key growth drivers in the sectors.

Institute for Development of Economics and Finance (Indef) executive director Enny Sri Hartati said, meanwhile, that she doubted that the industrial growth target of up to 6.1 percent could be achieved next year.

'€œI think the target can be achieved if the government is able to shift the existing [commodity-based] industry toward a processing industry. The thing is, can it be achieved shortly?'€ she said.

Enny argued that Indonesia'€™s manufacturing industry would likely grow at around 5 percent.

Separately, while the government reinstated that most industrial sectors were ready to compete with other ASEAN member countries under the AEC, the Industry Ministry acknowledged that the quality of the country'€™s workforce needed improvement.

Association of Indonesian Soft Drink Producers (Asrim) chairman Triyono Prijosoesilo said previously that the local beverage sector would likely face tough competition from its Southeast Asia'€™s peers.

'€œWe'€™ve recently seen a number of neighboring countries'€™ beverage brands coming in the country,'€ he said.

Publicly listed poultry firm PT Charoen Pokphand Indonesia launched bottled tea Fiesta White Tea under a partnership with a Japanese firm last year, and Thai bottled tea brand Ichitan recently entered the Indonesian market.

Triyono added that the main challenge for local beverage companies, and other companies in general, would be in marketing.