Industry
From The Report: Indonesia 2015
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Industrial development is perhaps the most important pillar of Indonesia’s long-term economic expansion strategy, and the nation has made significant economic strides in recent years as a result of its fast-expanding industrial sector. The country is now poised to outpace Thailand and Malaysia as a major regional manufacturing and export hub, and investors are increasingly choosing Indonesia over China, Thailand and Malaysia, drawn in by the country’s relative stability, sizeable low-cost labour pool and large domestic market. While it will make Indonesian exports more attractive to the global market, many of Indonesia’s major industries remain import-dependent, and rising input costs represent the most significant challenge facing operators. Industry and manufacturing are nonetheless poised to continue on an upwards trajectory, with major sectors – including pharmaceuticals, automotive manufacturing, textiles and metals – all projected to expand on the back of solid macroeconomic fundamentals.

This chapter contains interviews with Suryo Sulisto, Chairman, Indonesian Chamber of Commerce and Industry; Sudirman MR, Chairman, Association of Indonesian Automotive Industries; Eddy K Logam, Chairman, Indonesia Ship Building and Offshore Association; and Iwan S Lukminto, President, Sri Rejeki Isman.

Articles from this Chapter

Overview

Supporting expansion of industry in Indonesia
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Industrial development is perhaps the most important pillar of Indonesia’s long-term economic expansion strategy, and the nation has made significant economic strides in recent years as a result of its fast-expanding industrial sector. The country now is poised to outpace Thailand and Malaysia as a major regional manufacturing and export hub, and investors are increasingly choosing Indonesia over China, Thailand and Malaysia, drawn in by the country’s relative stability, sizeable low-cost labour…

Interview

Suryo Sulisto, Chairman, Indonesian Chamber of Commerce and Industry (KADIN): Interview
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Interview:Suryo Sulisto How can Indonesia become a production base for investors, rather than just a market for expansion? SURYO SULISTO: Indonesia needs to focus on attracting foreign direct investment that is long-term and aimed at boosting the country’s industrial fabric. There are two priorities in preparing Indonesia to reach this goal. The first is infrastructure, as there is an urgent need to speed up construction where this is lacking. Second, our government needs to put forth constructive…

Interview

Suryo Sulisto, Chairman, Indonesian Chamber of Commerce and Industry (KADIN): Interview
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Interview:Suryo Sulisto How can Indonesia become a production base for investors, rather than just a market for expansion? SURYO SULISTO: Indonesia needs to focus on attracting foreign direct investment that is long-term and aimed at boosting the country’s industrial fabric. There are two priorities in preparing Indonesia to reach this goal. The first is infrastructure, as there is an urgent need to speed up construction where this is lacking. Second, our government needs to put forth constructive…

Analysis

Government master plan for Indonesia’s industry
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With its target of becoming a highly developed nation by 2025, Indonesia is aiming to bolster industrialisation and value addition, as well as expand its labourintensive manufacturing industry as it implements the Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI.) An ongoing focus on industrial development has seen the government – including the new administration of President Joko Widodo – roll out a series of strategies and reforms aimed at improving…

Analysis

Green light for the auto sector in Indonesia
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With new export bans, investment reforms and a push for value addition driving a flood of new projects in the country, Indonesia’s manufacturing sector is slated for significant expansion in the medium term. Automotive manufacturing in particular is set to benefit, with the government’s low-cost green car (LCGC) programme witnessing strong growth when it was rolled out in 2013, while the luxury vehicle segment is expected to expand in the coming years. Growth Story Indonesia’s manufacturing…

Analysis

Indonesia’s industry must address a range of structural issues to ensure growth
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Bolstered by rising domestic consumption and comparatively low labour costs, Indonesia’s textile industry has reported years of steady expansion, with the value of exports estimated at more than $13bn in 2014. However, wage hikes and low productivity have cut into profits, while rising power costs in 2014 have had an adverse effect on the sector’s growth forecast for 2015. Overview Indonesia’s textile industry includes manufacturing and production activities across almost every segment of…

Interview

Sudirman MR, Chairman, Association of Indonesian Automotive Industries (GAIKINDO): Interview
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Interview:Sudirman MR To what extent are more government incentives needed to boost sales in segments other than the low-cost green car (LCGC) segment? SUDIRMAN MR: The LCGC initiative was introduced in 2013 under the umbrella of the Low Carbon Emission Programme, reducing taxes to 0% for cars that met lowemission and price points. It is a fact that this has helped increase sales for low-cost cars, but it is also true that other segments have been left behind. Hybrid, electric, and biofuel…

Interview

Eddy K Logam, Chairman, Indonesia Ship Building and Offshore Association (IPERINDO): Interview
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Interview:Eddy K Logam What can the government do to boost the domestic shipbuilding industry? EDDY K LOGAM: President Jokowi has stated that Indonesia must become a strong maritime nation. In order for this to happen, it is critical to improve coordination and collaboration among ministries. Realising the president’s vision will require building better ports and more efficient logistics systems, but more importantly, it requires a strong, healthy and competent local shipbuilding industry.…

Analysis

Tobacco manufacturers adapt to Indonesia’s more stringent regulatory environment
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Representing the world’s fifth-largest tobacco market, Indonesia’s tobacco industry has soared in recent years, with manufacturers vying for market supremacy in a country with an estimated 85m smokers. The market has long been attractive to major international players such as Philip Morris International (PMI) and British American Tobacco (BAT), which both witnessed sharp growth in profits after entering the market. However, although an expanding middle class should help growth prospects in the…

Interview

Iwan S Lukminto, President, Sri Rejeki Isman (Sritex): Interview
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Interview:Iwan S Lukminto What are Indonesia’s competitive advantages as a regional hub for textiles manufacturing? IWAN S LUKMINTO: The industry is vertically integrated, enjoying a stake in each level of the supply chain, from making yarn, polyester and rayon, to finished fabrics and garments. The requisite materials for textiles manufacturing are also already present within Indonesia, while its regional neighbours are more reliant on importing materials. There are still many opportunities…