The economy is surging ahead and, as it expands, authorities are seeking to make the transition from low-cost production and supplying raw materials to more advanced nations to a high-value-added manufacturing industry. Low tariffs have led to more non-tariff barriers in the form of export bans and other incentives to encourage domestic industry. The government is pursuing initiatives to move up the value chain by emphasising higher-value-added products, such as green cars and design. The biggest challenge facing the sector is how best to manage the transition from low- to high-value-added production. Striking a balance between the needs of sunset industries and emerging ones will be tricky, but strong growth is almost guaranteed in the short to medium term for industry in Indonesia. Most of the proposed manufacturing investments should happen, and the simple maths of an expanding economy lead to an expanding industrial base.
This chapter contains interviews with Purnomo Yusgiantoro, Minister of Defence; Johnny Darmawan, President Director, Toyota Astra Motor; and Vismay Sharma, President Director, L’Oreal Indonesia.