With the largest land mass, population and economy in South-east Asia, Indonesia has considerable potential to become the region’s industrial powerhouse. Nevertheless, with a development model traditionally reliant on the export of natural resources rather than processed goods, the Indonesian industrial sector remains below its potential. Indeed, in terms of output and exports of manufactured products, the country lags behind many of its neighbours. The expansion of the sector has been further hindered by restrictions on foreign investment, in conjunction with the relative underdevelopment of the county’s infrastructure network. However, this situation has changed in recent years, with the government identifying the industrial sector as a key driver of economic growth and diversification. The current administration aims to turn the country into a leading regional manufacturing centre, in part by easing the investment process for foreign firms and offering incentives, including through increasing the number of special economic zones.
This chapter contains interviews with Agus Gumiwang Kartasasmita, Minister of Industry; and Rosan Roeslani, Chairman, Indonesian Chamber of Commerce and Industry.