The manufacturing sector has been in decline for the last few years.
he winner of April’s presidential election will have a tough job on his hands to revive the country’s manufacturing sector, which is expected to play a dominant role in fueling the economy in the coming years.
Center of Reform on Economics (CORE) Indonesia executive director Mohammad Faisal said that stimulating higher GDP growth through the revitalization of the manufacturing sector should be a key agenda of the government going forward.
“The key to achieving higher growth is the revitalization of manufacturing. The next presidential debate should address this issue as one of the key agendas for the next five years, as we need to transform our economy to make it more competitive,” he said at a seminar on Tuesday.
The fifth and final presidential debate will be held in Jakarta on Saturday, April 13. During the debate, incumbent Joko “Jokowi” Widodo and his running mate Ma’ruf Amin and challenger Prabowo Subianto and his vice presidential pick Sandiaga Uno will discuss topics related to the economy, social welfare, finance, investment and industry.
Faisal said the manufacturing sector had been in decline for the last few years, with the rate of growth in the sector dropping below GDP growth, an alarming sign for policymakers. If this sluggishness continued, he added, it could spell dire problems for the country.
With the continued increase in commodity prices, the government has little choice but to expand processing industries to increase exports of processed goods, which can bring greater added value to the economy.
The manufacturing sector grew by 4.25 percent last year, according to data from Statistics Indonesia (BPS), slower than the GDP growth of 5.17 percent over the same period. The contribution of manufacturing to GDP has also declined from 26 percent before the 1998 financial crisis to 20 percent last year.
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