Car Manufacture
Gaikindo sees this year' national car sales will not be achieved cause low demand, tight competition, and influx of new players and variants from abroad - Photo by Gaikindo

JAKARTA (TheInsiderStories)Indonesia’s manufacturing sector in the first semester this year grew below 2018 target, making it harder to reach Making Indonesia 4.0 target of 25 percent contribution to the gross domestic product (GDP) by 2030.

Manufacturing sector recorded 4.58 percent in the first quarter this year (yoy), then decelerated to 3.97 percent in the second quarter of this year. The first-semester growth cumulatively reached 5.17%, below this year’s government target of 5.67 percent.

Indonesia booked an above expectation GDP at 5.27 percent (year on year/yoy) in the second quarter of this year, but the manufacturing growth slowed down.

The manufacturing sector contributed to 20.27 percent of GDP in the first quarter of this year and 19.83 percent of GDP in the second quarter of this year. It was far below government target in the Industry 4.0 roadmap or called “Making Indonesia 4.0” that has an ambitious target to increase manufacturing sector contribution to 25 percent by 2030.

Ministry of Finance‘s Head of the Center for Macroeconomic Policy, Fiscal Policy Agency Adriyanto blamed a long holiday during the second quarter of this year as the reason for weak manufacturing growth. However, he said that manufacturing sector growth in the second quarter of this year was better than the same period in the previous year at 3.93 percent.

Despite its weak growth, Industry Minister Airlangga Hartarto showed confidence that the manufacturing sector will increase in the next quarter of this year. He said election momentum that fell on this year and next year will bring positive impact to higher domestic demand thus pushes manufacturing sector especially foods and beverages industry, textile, footwear, and printing.

He said the government put more efforts to create a conducive business climate so that the industries conduct more aggressive expansions in attempts to fulfill domestic and export demands.

“We believed there will be an increase in mining-related industries due to commodity price hike,” he added in a press release on Tuesday (7/8).

Hartarto’s optimism also pushed by a fact that Indonesia ranked 4th out of 15 countries in the world that its manufacturing sector contributed significantly to GDP according to the United Nations Industrial Development Organization (UNIDO). The country is able to contribute up to 22 percent of GDP after South Korea (29 percent of GDP), China (27 percent of GDP), and Germany (23 percent of GDP).