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Jakarta Post

Focus on Java holds back Indonesia’s manufacturing industry

  • Rachmadea Aisyah

    The Jakarta Post

Jakarta   /   Tue, August 13, 2019   /  01:35 pm
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Rolled steel is arranged at JFE Steel Galvanizing Indonesia in Cikarang, West Java. The contribution of the manufacturing sector to the country’s GDP is still below the targeted 20 percent.(Antara Photo/Risky Andrianto)

The manufacturing sector is the largest contributor to Indonesian exports as well as the country’s GDP, but the fact that the sector is heavily concentrated on one island of the archipelago has been holding it back, experts believe. Indonesia’s Java-centric industrial development reflects in Statistics Indonesia (BPS) data from June, which show that Java alone accounted for 47.62 percent of national exports. From January to June, 55 percent of new investment projects were located in Java. Edi Prio Pambudi, an expert staff member at the Office of the Coordinating Economic Minister, said the centralization had led to high costs of the country’s manufactured products. “Our manufacturing industries are mostly located on the island of Java, so we create all our logistics plans based on that location, which raises logistics and transactional costs,” E...