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Indonesia's Manufacturing Sector Performance Declines for 12 Consecutive Years

Adi Ahdiat 01/08/2024 11:48 WIB

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According to BPS data, Indonesia's manufacturing sector's contribution to GDP has declined for 12 consecutive years, specifically from 2012 to 2023.

Contribution of the Manufacturing Industry Sector to Indonesia's GDP (2010-2023)

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Contribution of the Manufacturing Industry Sector to Indonesia's GDP (2010-2023)

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The National Development Planning Agency (Bappenas) states that the contribution of the manufacturing sector to Indonesia's Gross Domestic Product (GDP) continues to decline.

"This is not good for the Indonesian economy, because the manufacturing industry is very important for a developing country like Indonesia," said Amalia Adininggar Widyasanti, Deputy for Economic Affairs at Bappenas, as reported by *CNNIndonesia.com* (July 30, 2024).

Based on data from the Central Statistics Agency (BPS), the contribution of the manufacturing sector has indeed been decreasing.

In 2010, the sector contributed 22.04% to the GDP at constant market prices (ADHK), and briefly rose to 22.06% in 2011.

However, after that, its contribution continued to weaken. A downward trend occurred for 12 consecutive years since 2012, until the manufacturing sector's contribution to GDP at constant market prices (ADHK) reached 20.39% in 2023.

According to Ronny P. Sasmita, an analyst from the Indonesia Strategic and Economic Action Institution, the decline in manufacturing performance could result in reduced job absorption.

"The decline in manufacturing activity is certainly very dangerous for our economy, at a time when the service sector is also not developing well. The manufacturing sector is a major part of economic modernization, as it absorbs a large number of workers on the one hand, and requires specialized skills on the other," said Ronny, as reported by *CNNIndonesia.com* (July 30, 2024).

Ronny believes that many factors burden the performance of Indonesian manufacturing, such as technological backwardness that makes production costs high and products less competitive, minimal government support, a large number of imported products, and a lack of research and product development.

"All these reasons make domestic manufactured products less competitive than imported products. Their prices become much more expensive," said Ronny.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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