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Jakarta Post

Indonesia's manufacturing sector set to be part of global supply chain

  • News Desk

    The Jakarta Post

Jakarta   /   Sun, January 1, 2017   /  10:34 am
Indonesia's manufacturing sector set to be part of global supply chain A worker walks in an auto assembly plant in Bekasi, West Java. The government eyes the automotive sector as one of the sectors it will develop to boost the manufacturing industry. (Kompas/Totok Wijayanto)

Indonesia aims to make its manufacturing industry a key part of the global supply chain, the National Development Planning Agency (Bappenas) has said. 

De-industrialization has been a widespread concern in Southeast Asia’s biggest economy for more than a decade. 

Indonesia wants to integrate its economy more deeply into the world trade system, meeting demand for manufactured goods in the future, National Development Planning head Bambang Brodjonegoro said during a year-end press conference at his office on Saturday.  

To do this, the country needs to produce more quality products, he added.

“By becoming part of the global supply chain, we can reduce our dependence on commodities vulnerable to global price movements," Bambang said as quoted by Antara news agency.

(Read also: Indonesia sets high hopes on manufacturing sector in 2017)

The domestic manufacturing industry, which comprises the oil and gas sector and the non-oil and gas sector, expanded by 4.25 percent last year, according to the Industry Ministry. This figure was lower than economic growth of 4.79 percent.

Its contribution to gross domestic product (GDP) stood at 20.84 percent, of which 18.8 percent was produced by the non-oil and gas industry. 

Bambang further said that becoming an industrialized nation, marked by a 30 percent share of the manufacturing sector to GDP, was a prerequisite to becoming an advanced nation. He added that this process would take a long time. 

Indonesia could potentially develop natural resource-based, labor-intensive consumer goods and automotive industrial sectors in the future to help it reach this ambition, he said. 

Before the 1997-1998 financial crisis, the industry enjoyed robust growth, outpacing economic expansion. (lnd)

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