Indonesia’s manufacturing industry is entering 2026 with renewed optimism. The Ministry of Industry projects stronger production capacity, backed by new facilities, rising investment, and job creation. Despite global uncertainties, policymakers believe the sector will remain a key driver of national economic growth.
Key Facts & Background
- New Industrial Facilities:
- As of 15 January 2026, 1,236 companies reported construction of industrial facilities.
- These facilities are expected to begin production this year.
- Estimated employment absorption: 218,892 workers.
- Investment Realization:
- Non-oil and gas manufacturing investment: Rp551.88 trillion.
- Investment excluding land and buildings: Rp444.25 trillion.
- Target for 2026: Rp852.90 trillion in non-oil and gas manufacturing.
- Economic Contribution:
- Manufacturing GDP growth target: 5.51% in 2026.
- Sector projected to absorb 14.68% of total national workforce.
- Labor productivity target: Rp126.20 million per worker per year.
- Policy Focus:
- Strengthening domestic value-added production.
- Deepening industrial structure and supply chain integration.
- Promoting Industry 4.0 transformation and efficiency in raw material supply.
- Domestic market contribution: 80%, export market: 20%.
- Export target: 74.85% of total national exports from non-oil and gas manufacturing.
- Key Sub-Sectors:
- Basic metals: growth driven by infrastructure and downstream projects.
- Food and beverages: largest contributor to manufacturing GDP due to population demand.
- Chemicals, pharmaceuticals, and medicines: rising demand linked to health awareness and industrial needs.
- Government Measures:
- Policies to reduce import dependence and increase local content (TKDN).
- Optimization of government and SOE spending on domestic products.
- Strengthening small and medium industries (IKM) to join national supply chains.
- Stimulus packages, import controls, and streamlined licensing to support business climate.
Strategic Insights
The outlook for Indonesia’s manufacturing sector in 2026 reflects a deliberate strategy to anchor economic growth in industrial expansion. With over a thousand new facilities set to begin operations, the sector is positioned to absorb significant labor and contribute to GDP growth. The government’s emphasis on import substitution, local content, and industrial deepening highlights a long-term vision of self-reliance and resilience. By focusing on both domestic demand and export diversification, policymakers aim to balance internal stability with global competitiveness.
At the same time, the sector’s trajectory will depend on how effectively Indonesia navigates structural challenges and global uncertainties. The integration of Industry 4.0 technologies, stronger supply chain linkages, and targeted support for small and medium enterprises will be critical in sustaining momentum. If these strategies succeed, manufacturing could reinforce its role as the backbone of the economy, driving inclusive growth, job creation, and industrial modernization well beyond 2026.