In his inaugural Cabinet Meeting on 23 October 2024, President Prabowo Subianto reaffirmed that downstream industrialization is central to Indonesia’s economic prosperity. He called on ministers to swiftly map out and execute 26 strategic commodity projects, emphasizing the need for rapid implementation.
Indonesia has the potential to transform its natural resource wealth into economic resilience, but structural challenges, including fragmented industrial processes, low manufacturing share of GDP, and reliance on assembly over full value-chain integration, continue to hinder progress. The decline in manufacturing’s GDP share from 28.3% in 2003 to 18.3% in 2022 underscores the urgency for revitalization.
Key obstacles include:
- Skills and technology gaps that limit productivity and competitiveness.
- High energy demands for industrial production.
- Trade disputes that threaten export growth.
- Predatory pricing and dumping practices are impacting local industries.
The textile and electronics sectors exemplify these vulnerabilities, with foreign competition leading to factory closures, job losses, and reduced utilization rates.
The Indonesian Business Council (IBC), in its “15 Policy Package Recommendations”, calls for a coordinated industrial strategy to protect local industries and drive downstream growth. This includes:
- Regulatory reforms to ensure fair competition and prevent harmful trade practices.
- Enforcement of high-quality and environmental standards.
- Workforce development and technology adoption to raise competitiveness.
By advancing downstream industrialization, Indonesia can secure sustainable jobs, strengthen its industrial base, and position itself as a resilient, globally competitive economy.