In the post-Brexit world and the United States President Donald Trump era, localization policy such as “buy local” and “hire local” is on the rise. Indonesia should not fall into this narrow-minded economic populism and instead embrace and manage globalization if it is to revitalize its manufacturing sector in this new era.

The industrial sector is the largest employment creator in Indonesia, but it hasn’t been living up its greatest potential, yet. The problem with industrialization in Indonesia lies on three fronts.

First, Indonesia’s manufacturing base is relatively low and tends to shrink over time. In the early 2000s it contributed to around 30 percent of gross domestic product (GDP), but in 2015 it made up only slightly above 20 percent of GDP.

Second, Indonesia’s manufacturing exports are relatively small compared to other middle-income industrial countries. The majority of Indonesia’s export are unprocessed commodities and mineral-based products, while manufactured exports made up only 41 percent of total goods exported in 2014.

China’s manufacturing exports, on the other hand, make up more than 90 percent of its total exports and even a lowermiddle income country such as Vietnam has around 70 percent manufacturing goods in its export basket.

The third issue is that Indonesia’s manufacturing exports are dominated by low-technology products.

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