Agus Gumiwang Kartasasmita, Minister of Industry: Interview

Agus Gumiwang Kartasasmita, Minister of Industry

Interview: Agus Gumiwang Kartasasmita

What is being done to boost the export capacity of small and medium-sized enterprises (SMEs)?

AGUS GUMIWANG KARTASASMITA: The Ministry of Industry (MoI) has, at its core, the goal of enabling SMEs to access the global market. There are currently four main programmes in place to boost the export capacity of SMEs. The first seeks to match SMEs with larger production companies and build connections between them. This allows smaller companies to build greater capacity, improve the quality of production and raise their productivity. The second supports SMEs through facilitating their participation in promotional events, such as international exhibitions. The third is a programme for business digitalisation, called e-smart IKM, which introduces SMEs to broader markets through e-commerce channels. The programme started by assisting SMEs to advertise their products domestically, thereby allowing them to better prepare for sales in the international market. Lastly, the MoI facilitates price deductions for SMEs to invest in new machinery. In this way, we aim to increase productivity and assist in cash flow. As of early 2020 the discount programme had reached over 300 SMEs with a total investment of $10m.

How are inefficiencies in Indonesia’s international supply chains being addressed?

KARTASASMITA: There are currently several major issues facing Indonesian industry. The eight main challenges to the sector are: waste management, energy use, human resources, excessive costs, limitations placed on SMEs, the availability of materials, infrastructure shortfalls and issues regarding the resilience of domestic industry. All these challenges tie in closely with supply chain inefficiencies, and the MoI is addressing these one at a time. These issues have been plaguing Indonesian industry for years. Therefore, overcoming these challenges stands at the top of our priority list, although it may take time to address them in full. We need to be more proactive in pursuing economic partnership agreements with other countries. This will allow us to be better integrated globally and assist us in overcoming these obstacles. Indonesia is currently in ongoing trade negotiations with more than 10 countries, and we hope that by the end of President Joko Widodo’s second term in 2024 we will have finalised half of these.

In what ways can smart technologies be harnessed to boost manufacturing capabilities?

KARTASASMITA: The government has launched Making Indonesia 4.0 as an initiative to accelerate the country’s industrial development. We are currently implementing Industry 4.0 objectives, with the primary goal of becoming one of the top-10 largest economies in the world by 2030. We have identified specific targets for trade, and we believe that incorporating technology into our growth strategy will see us reach our export goals. For example, we want net exports to contribute 10% to GDP, but to achieve this 2% of total GDP should be allocated to research and development activities.

We have identified the following five industrial sectors as priority focus areas under the Making Indonesia 4.0 programme: food and beverage, textile and apparel, automotive, chemicals and electronics. These sectors were chosen because their contribution to the manufacturing industry is central to both job creation and GDP growth. The implementation of the Making Indonesia 4.0 strategy has enjoyed some progress so far, such as the launch of the Indonesia Industry 4.0 Readiness Index. We have also established the Centre for Industry 4.0 Digital Innovation, and sought to strengthen industrial human resources through the development of vocational training programmes. In addition, we were the official partner country for the Hannover Messe international trade fair and exhibition in April 2020.

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The Report: Indonesia 2020

Industry chapter from The Report: Indonesia 2020

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