Sunday, 21 July 2019 | 22:15 WIB

Indonesia’s Manufacturing Contribution is Higher than the Global Average

Indonesia Ministry of Industry Airlangga Hartarto (special)

JAKARTA, NETRALNEWS.COM -- The processing industry still makes the biggest contribution to the structure of the national gross domestic product (GDP) in Indonesia, with contribntion of 20.07 percent in the first quarter of 2019. Based on data from the Central Statistics Agency (BPS), this number has increased compared to 2018 achievement of 19.86 percent.

"From the 20 percent achievement, the World Bank report also shows that Indonesia is ranked fifth among the G20 countries," said Minister of Industry Airlangga Hartarto in Jakarta, Tuesday (05/07/2019).

According to Airlangga, Indonesia is almost on par with Germany, whose manufacturing sector contribution is at 20.6 percent. Meanwhile, the top position is occupied by China (28.8%), followed by South Korea (27%) and Japan (21%).

Currently, industrialized countries in the world, the contribution of the manufacturing sector to the economy is around 17 percent on average. They include Mexico, India, Italy, Spain, the United States, Russia, Brazil, France, Canada and the United Kingdom.

"That means, now there are no countries in the world that can reach above 30 percent," he said. Therefore, through the contribution of a large manufacturing sector, it is not appropriate for Indonesia to be considered a deindustrialized country.

"Moreover, currently Indonesia is included in the top 16 countries that have the strongest economy in the world," he added. In fact, through Making Indonesia 4.0, its big aspiration is to realize Indonesia is among the 10 countries that have the strongest economy in the world by 2030.

"Based on the PwC and McKinsey studies, we can enter the top 7 of the world economy in 2045, while at 100 years Indonesia will be independent, we will become the 4th largest economy in the world," said Airlangga.

Furthermore, according to BPS data, the growth of the non-oil and gas processing industry reached 4.80 percent in the first quarter of 2019. This number increased compared to the acquisition in 2018 which was at 4.77 percent.

The manufacturing sector that experienced the highest growth was the textile and apparel industry by 18.98 percent. Followed by the tobacco processing industry which grew to 16.10 percent, then the furniture industry grew 12.89 percent and the chemical, pharmaceutical and traditional medicine industries grew 11.53 percent.

The positive performance was also followed by the paper and paper products industry, printing and reproduction of recording media which experienced 9.22 percent growth, the base metal industry grew 8.59 percent, and the food and beverage industry grew 6.77 percent. These manufacturing sectors that were able to surpass national economic growth in the first quarter of 2019 were 5.07 percent.

"Most of these industries are priority development according to the map of Making Indonesia 4.0. This sector has a large economic impact and feasibility criteria for implementing industry 4.0, and is seen from the contribution to GDP, trade, the potential impact on other industries, the amount of investment and the speed of market penetration, "he explained.

On the other hand, the stretch of the Indonesian manufacturing industry was also seen from the purchasing manager index (PMI) achievement released by the Nikkei. "If we look at the current industry conditions based on PMI, the level of trust from industry players is quite high. Our PMI index is always above 50, except for January. Because when in January a new contract was given, "he explained.

Indonesia's manufacturing PMI in April 2019 was at 50.4. A rating above 50 indicates the manufacturing sector is expanding. "It also indicates that they see the business climate in Indonesia as conducive and able to manage the economy through new norms," ​​he said.

The Ministry of Industry is optimistic that the non-oil and gas industry growth target is 5.4 percent in 2019. The sectors that are projected to grow are high, including the food and beverage industry, the machinery industry, the textile and apparel industry, and the leather and footwear industries. .

"The manufacturing industry is the backbone of national economic growth. Apart from that, it is a mainstay sector in spurring equitable distribution of development and inclusive social welfare, ”said the Minister of Industry.

According to him, developing competent industrial human resources is the key to achieving success in implementing Making Indonesia 4.0. This is also the momentum for Indonesia to take advantage of the demographic bonus until 2030.

"Therefore, President Joko Widodo instructed that starting this year the focus of national development is to improve the quality of human resources. This is a big potential for Indonesia going forward, "he said.

Therefore, so that industry players can be encouraged to engage in vocational education and training activities and actively carry out research and development activities, the government will launch a super deductible tax incentive.

This facility is believed to be creating a competent industrial workforce and producing product innovation.