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’ manufacturing sector rose by 4.07 percent in 2018 against the previous year released by the Indonesia Statistics in Jakarta on Friday (02/01). This was due to the increase in industrial leather production, leather goods and footwear, up 18.78 percent.

While the computer industry, electronic and optical goods, fell 15.06 percent. The agency also noted that manufacturing sector growth in the fourth quarter (4Q) of 2018 rose by 3.90 percent in annual basis against the 4Q of 2017. In details, beverage industry production up 23.44 percent and the computer industry, electronics and optical goods, fell 16.87 percent.

On quarter to quarter basis, manufacturing production rose by 0.90 percent. The highest production was repair services and installation of machinery and equipment, up 13.29 percent. What’s down is the food industry by 7.69 percent.

Previously, Minister of Industry Airlangga Hartarto, said some global scale investors still believe on the country amid the political and economic conditions in Indonesia which are considered stable ahead of the political year. He added, that the international companies such as Apple, Coca-Cola, and General Electric promised to increase their investment.

The minister is optimistic that Indonesia’ economic growth outlook is more positive, even though the economy in the world is still slow growth. Based on the Investment Coordinating Board data, the realization of investment in the manufacture sector reached Rp222.3 trillion (US$15.88 billion).

The food industry recorded the largest amount worth of Rp39.1 trillion followed by chemical and pharmaceutical industries with an investment value of Rp13.3 trillion. For foreign direct investment, the largest investment is the base metal industry, non-machine metal goods and equipment worth $2.2 billion, chemical and pharmaceutical industries was valued at $1.9 billion and the food industry amounted to $1.3 billion.

For this reason, Indonesia will focus on boosting investment in five priority sectors in Making Indonesia 4.0, namely the food and beverage industry, textile and clothing, automotive, chemical and electronics. However, other sectors are also encouraged such as the pulp and paper and steel industries.

In fact, according to Hartarto, the warehousing and transportation sector which records high realization is considered to be able to encourage industrial performance, because it is part of the development of logistics efficiency. This can encourage the development of the processing industry supply chain.

The trade war between the United States and China, he added, can also open opportunities for the entry of manufacture investment in Indonesia. Some textile, clothing and footwear industries are considering moving factories from China to Indonesia, he said.

The Indonesian Textile Association said, currently there is the third largest textile company in China which is finalizing plans for investment in the fabric and dyeing sector in Indonesia. The funds that will be invested by Chinese companies are around Rp500 billion and are expected to increase to close to Rp1 trillion.

Meanwhile, the Indonesian Footwear Association said that one of the footwear companies from China, the Shoetown Group, would add a factory with a PT Shoetown Ligung Indonesia flag in Majalengka, West Java. The total investment to be disbursed reaches $200 million.

Reportedly, Airlangga had also proposed the harmonization of the non-motorized Sales Tax on Luxury Goods (STLG) scheme by reducing the tariff to be eliminated. This effort is carried out to boost the productivity of the national automotive industry so that it can meet the needs of the domestic market to export.

Minister of Coordinating Ministry for Maritime Affairs Luhut Panjaitan, on Jan. 31 held a coordination meeting related to the draft Government Regulation on Non-motorized STLG. He said, there is a large potential for state revenues from this fiscal incentive policy if it later applies.

He said that state revenue from STLG yachts reached Rp3 billion, but with the removal of the tax, it is estimated that State revenues will reach Rp 6 trillion.

Written by Lexy Nantu, Email: theinsiderstories@gmail.com