Saturday, 25 May 2019 | 09:50 WIB

Manufacturing Industry Consistently Supports Indonesian Economic Growth

Indonesia Minister of Industry Airlangga Hartarto (garudanews)

JAKARTA, NETRALNEWS - The manufacturing industry in Indonesia still shows a positive trend to continue to increase investment and expansion. To support this business passion, the government is committed to creating a conducive business climate by providing fiscal facilities and ease of licensing.

"Therefore, the government is increasingly serious and aggressively pushing for the downstream industry policy because it is considered capable of boosting significant national economic growth," said Minister of Industry Airlangga Hartarto in Jakarta on Thursday (03/14/2019).

The Minister of Industry asserted that so far the downstream industry policy had provided a broad chain effect for the national economy starting from the increase in domestic value-added raw materials, absorption of local labor, to foreign exchange earnings from exports.

"In accordance with the direction of Mr. President Joko Widodo, downstreaming needs to be really encouraged. So we no longer need to export raw materials. So, we must dare to switch, by sending goods in semi-finished or finished form, "he explained.

This strategic step is in accordance with the implementation of the Making Indonesia 4.0 road map, which aims to revitalize the manufacturing sector to be more competitive globally in the industrial era 4.0. For this reason, the government stressed the importance of carrying out economic transformation, which shifted the consumption-based economy to manufacturing-based.

UNIDO said that Indonesia was among the 4 Asian countries that had the highest manufacturing value added in the world. "So, we are with China, Japan and India," Airlangga added. The national industrial value added increased to USD34 billion, from 2014 which reached USD202.82 billion and in 2018 to USD236.69 billion.

"Current policies are aimed at more inclusive and quality development and economic equality. We are optimistic that it can reduce poverty and inequality and increase employment as much as possible, "said Airlangga.

Based on the Nikkei report, the purchasing managers 'index (Purchasing Managers' Index / PMI) of Indonesian manufacturing has increased, from January 2019 at 49.9 to 50.1 in February. Levels above 50 indicate the manufacturing sector is expanding.

"It means, from these achievements, investors in the industrial sector see that Indonesia has been able to manage the economy through a new norm," he explained. The new norm in question, is that the average industrial country in the world currently experiences a manufacturing contribution to the economy of only 17 percent.

However, there are five countries whose manufacturing industries are able to contribute above the average, namely China (28.8%), South Korea (27%), Japan (21%), Germany (20.6%), and Indonesia (20.5%). "When referring to World Bank data, now there are no more countries in the world whose industrial contributions can reach above 30 percent," he said.

In fact, there is no double digit global economic growth and industrial countries. According to Bank Indonesia data (2019), China's growth fell from 6.9% (2015) to 6.5% (2018: quarter IV), South Korea fell from 2.8% (2015) to 2% (2018: IV quarter ), and India fell from 7.4% (2015) to 6.7% (2018).

"We should be grateful, in the midst of global wind pressure, our economy grew from 5.07% in 2017 to 5.17% in 2018. The manufacturing industry sector is consistently the backbone of the national economic growth," said the Minister of Industry.