JAKARTA (TheInsiderStories) – Indonesia aiming non oil and gas manufacturing grow 8.3 percent in 2024 by boosting investment and exports, said industry minister last week. Along with the target, the ministry also wants to boost the contribution of the manufacturing sector to the national economy by 18.9 percent.
“We will convince potential industrial sector investors to enter Indonesia, especially to produce imported substitute products,” said the minister, Agus Gumiwang Kartasasmita in an official statement released on Friday (02/14).
He optimism, the commitments of large-scale industries, such as South Korea’ Hyundai Motor Corp., Japan’ Toyota Motor Corp., and United States’ Amazon to support the targets. In order to boost the value of national manufacturing exports, he continued, the ministry will actively inviting industry players to be more aggressive in opening up market opportunities in nontraditional countries.
According to him, the establishment of industrial finance institutions is very important, in accordance with the mandate of Law Number 3 of 2014 concerning Industry. In the near future, his officials will also conduct safaris to a number of stakeholders, including credit financing institutions.
“We believe, with the formation of a financial institution, it can provide space for domestic industries to enter products that have so far been imported. So, our industry can easily get capital,” said Kartasasmita.
Based on President Joko Widodo, he adds, the automotive industry in the country needs to be encouraged to fill the export market, especially to Australia. This exploits opportunities from the ratification of the Indonesia – Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
“Another step, of course, is optimizing the program to Increase the Use of Domestic Products and encourage the ministries and institutions use as much as possible their budget to buy domestic products,” he asserted.
Earlier, Kartasasmita, targeting the manufacturing industry to grow in the range of 4.80 – 5.30 percent in this year, along with the soaring productivity of a number of sectors through additional investments. The contribution of the non-oil and gas processing industry is expected to rise to 17.80 – 17.95 percent from 17.58 – 17.70 percent in 2019.
“So the government is now focusing on developing the manufacturing industry sector. In 2019, we set at 4.48 – 4.60 percent, and this year it is projected to 4.80 – 5.30 percent,” he told reporters on Jan. 6.
So far, the minister went on, the industrial sector has a strategic role because it consistently provides the largest contribution to the countries economy. Moreover, industrial activity has broad dual effects for increasing the added value of domestic raw materials, absorption of local labor, and foreign exchange earnings from exports.
Therefore, the government is intensively attracting investment, especially for export-oriented industrial sectors, import-substitution, and labor-intensive sectors. In the January-September 2019, the investment value of the industrial sector penetrated Rp147.3 trillion (US$10.52 billion), with a cumulative value since 2015 of Rp1,216.2 trillion.
“We project that the investment value in 2019 will be Rp188.8 – 204.6 trillion. Whereas in 2020, investment in the industrial sector is targeted to reach Rp307 – 351 trillion. This certainly needs to be supported by the completion of investment constraints and the regulations through the omnibus law bill, which is currently being discussed by the government,” the minister noted.
As investment in the industrial sector increases, employment trends also continue to grow. This can be seen in 2015 to August 2019, the number of workers in the industrial sector has reached 18.93 million people. Meanwhile, in 2020, the number of workers in the industrial sector is estimated at 19.59 – 19.66 million.
To facilitate investment coming into the country, the government continues to prioritize the spread of industries outside Java, one of which is through the development of priority industrial areas. In 2020 – 2024, there are 27 priority industrial areas planned, namely 14 on the island of Sumatra, six on Kalimantan, one on Madura and Java, three on Sulawesi and Maluku Islands, one on Papua and West Nusa Tenggara.
The government is overseeing several large industrial sector investments from Taiwan and the United States, including CPC Corporation (Taiwan) in the petrochemical industry sector, LiteMax (Taiwan) in the electronics industry sector and Smart City, Taiwan Sugar Corp (Taiwan) in the sugar industry sector, and UNICAL (US) in the aerospace industry sector, Kartasasmita stated.
The minister further explained, from January to October 2019, exports of manufactured products at $105.05 billion. The three sectors which were the biggest contributors were the food and beverage industry of $21.73 billion, followed by the base metal industry at $14.64 billion, and the textile and apparel industry amounting to $10.84 billion.
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