Indonesia’s industrial sector is gaining momentum, with several subsectors recording double-digit growth in the first year of the Prabowo Subianto administration. This expansion reflects a maturing manufacturing base and rising global competitiveness, supported by targeted policy reforms and infrastructure development. As optimism builds among industry players, the country is poised to deepen its role in global value chains.
Key Facts & Background
- Minister of Industry Agus Gumiwang Kartasasmita reported solid industrial growth of 12.27% in the first year of President Prabowo’s administration.
- High-performing subsectors include:
- Basic metals: 12.27%
- Leather, leather goods, and footwear: 8.13%
- Food and beverages: 6.18%
- Other growing subsectors: electronics, chemicals and pharmaceuticals, machinery and equipment (5–6% growth).
- Indonesia’s Manufacturing Value Added (MVA) in 2024 reached USD 265.07 billion, ranking:
- 13th globally
- 5th in Asia
- 1st in ASEAN, surpassing Thailand and Malaysia
- According to the IMD World Competitiveness Ranking 2025:
- Indonesia ranks 40th out of 69 countries
- Strongest performance in economic performance (24th) and business efficiency (26th)
- Infrastructure remains a challenge (57th)
- Government priorities include:
- Accelerating industrial infrastructure (energy, logistics, human capital)
- Strengthening domestic market protection and local content (TKDN)
- Enhancing production technology and workforce quality
- Industry sentiment indicators:
- Industrial Confidence Index (IKI): 53.02 (expansive zone)
- Manufacturing PMI: 50.4 (expansion threshold)
- Average utilization rate of non-oil and gas manufacturing (IPNM) from Oct 2024–Aug 2025: 62%, indicating room for further expansion.
Strategic Insights
Indonesia’s industrial performance in 2025 signals a structural shift toward a more resilient and globally integrated manufacturing economy. The strong growth across diverse subsectors—from metals and machinery to food and footwear—reflects both rising domestic demand and improved export competitiveness. This diversification is critical for economic stability, especially as global supply chains evolve and geopolitical uncertainties persist.
The surge in Manufacturing Value Added (MVA) and Indonesia’s ascent to the top spot in ASEAN manufacturing underscore the country’s growing industrial clout. This achievement is not merely statistical—it represents years of policy alignment, investment in capacity, and strategic positioning. By surpassing regional peers like Thailand and Malaysia, Indonesia is redefining its role in regional production networks and attracting greater foreign direct investment.
However, the IMD competitiveness ranking reveals a dual reality: while economic and business efficiency are improving, infrastructure remains a bottleneck. Addressing this gap is essential for sustaining industrial momentum. Investments in energy reliability, logistics connectivity, and workforce development will be pivotal in unlocking higher productivity and enabling scale. The government’s commitment to infrastructure acceleration is a strategic move to convert latent capacity into active output.
Policy measures aimed at protecting the domestic market and boosting local content (TKDN) are also central to long-term industrial resilience. These strategies not only support domestic manufacturers but also foster innovation and supply chain localization. Coupled with technology upgrades and workforce skilling, they lay the foundation for a competitive and sustainable industrial ecosystem.
The positive sentiment reflected in the IKI and PMI indices suggests that industry players are confident in the trajectory of the sector. With utilization rates at 62%, there is ample room for expansion, provided that enabling conditions—such as financing, logistics, and regulatory clarity—are maintained. This optimism, if matched with execution, could translate into higher employment, export earnings, and regional development.