en_gb

id
zh_cn
nl

Sign in
Subscribe
Newsletter
en_gb
id
zh_cn
nl

Sign in
Subscribe
Newsletter
Home
Newsletter
Introduction
News
Today's Headlines
News Columns
News Flash Indonesia
Polls Indonesia Investments
Trade Expos & Exhibitions
Projects
Government Development Plans
Public-Private Partnerships
Private Projects
Public Projects
Finance
Financial Columns
Indonesia Stock Exchange
Stocks & Bonds
Tax System
Macroeconomic Indicators
Contacts
Business
Business Columns
Indonesian Companies
Commodities

Industries & Sectors

Risks
Foreign Investment
Working & Living
Business Platform
Culture
Culture Columns
Business Visit
Politics
Economy
Religion
Population
Tourist Guide
About Us
Who We Are
Writers' Team
Contact
Join Us

Search

Home
Back
Home
Newsletter
Introduction
News
Back
News
Today's Headlines
News Columns
News Flash Indonesia
Polls Indonesia Investments
Trade Expos & Exhibitions
Projects
Back
Projects
Government Development Plans
Public-Private Partnerships
Private Projects
Public Projects
Finance
Back
Finance

Financial Columns
Indonesia Stock Exchange
Stocks & Bonds
Tax System
Macroeconomic Indicators
Contacts
Business
Back
Business
Business Columns
Indonesian Companies
Commodities
Industries & Sectors
Risks
Foreign Investment
Working & Living
Business Platform
Culture
Back
Culture
Culture Columns
Business Visit
Politics
Economy
Religion
Population
Tourist Guide
About Us
Back
About Us
Who We Are
Writers' Team
Contact
Join Us
Language Select language
Back
id
zh_cn
nl
Sign in
Subscribe
Newsletter
14 September 2016 (closed)
USD/IDR (13,131) -59.00 -0.45%

EUR/IDR (14,761) -74.24 -0.50%

Indonesia Stock Exchange (5,146.04) -69.53 -1.33%
Portfolio Selected Companies (110,101) -1,020.00 -0.92%
GDP Growth Q2-2016 5.18%
Inflation August 2016 2.79% (y/y)
Central Bank BI 7-Day Reverse Repo August 2016 5.25%
Home
Culture
Economy
General Economic Outline
Industry

Industrial Sector of Indonesia

The industrial sector is the sector that currently contributes most to Indonesia's
annual GDP growth. The two most important sub-sectors of industry are mining
and manufacturing, both being major pillars of the nation's economy since the
1970s, thus being engines of economic change and development during
Suharto's New Order regime. Although the manufacturing sub-sector has lost its
momentum after the Asian Crisis of the late 1990s, it still constitutes the most
popular sub-sector of Indonesia in terms of foreign direct investment (FDI),
followed by the mining sub-sector.
Industrial growth
(annual percent change)

2010

2011

2012

2013

2014

4.7

5.3

5.2

4.3

4.1

indicates a forecast
Source: World Bank

Throughout the first decade after the Asian Crisis, the industry sector underwent
a period of recession in which foreign investors lacked appetite to invest. After
2008, however, foreign companies and investors have regained confidence in
this sector due to robust domestic demand brought on by a growing middleclass, low wages and the promising perspectives of the mining sub-sector
(discussed in more detail below). One indicator that shows investors' appetite
for Indonesia's industry sector is the significant rise in hectares of industrial land
that was taken up in the Greater Jakarta area from 2010 onwards.
Indonesia's main mining and manufacturing products are:
Coal

Footwear

Oil

Textile Products

Gold

Paper Products

Automobiles

Furniture

Electronics
However, there is plenty of room for improvement to make this industry sector
more efficient and attractive. An important matter is the need for improvement
in Indonesia's infrastructure to make industries more productive and costefficient. Moreover, complicated bureaucracy, corruption and legal uncertainty
jeopardize investors' confidence in the Indonesian market.

Recent free trade agreements (such as the China ASEAN free trade agreement in
2010) are regarded by some economists as having a negative impact on
Indonesia's industrial sector as Indonesian products are unable to compete with
Chinese ones, resulting in a massive influx of cheaper Chinese products onto the
Indonesian market and thus disrupting local Indonesian economies. It will be
important for the Indonesian industry sector to become both more effective and
efficient in the production process as well as logistics (which includes more
investments in infrastructure as mentioned above).
For a detailed account on obstacles for economic development such as
infrastructure and governance, please visit our Risks of Investing in Indonesia
section.
Mining in Indonesia
Although mining has always been an important sub-sector of industry in
Indonesia, it gained renewed attention - both nationally and internationally - in
the mid- and late 2000s when commodity prices rose significantly and when the
country had more-or-less recovered from the Asian Crisis. Indonesia is currently
a major producer of coal, copper, gold, tin and nickel. The country remains the
leading global exporter of thermal coal. But apart from coal mining, investments
in the mining sector have been limited in recent years mainly due to regulatory
uncertainty which hurts the investment climate. In January 2009 a new law
"Mining Law No. 4 2009" came into force with the aim of providing a conducive
mining investment climate which is more environmentally friendly, foresees a
larger role for domestic stakeholders and aims for more value-added processing
within the country. As it also led to an increase in exports of raw minerals the
government is making legal incentives to stimulate value-added processing
industries, including a possible ban on the export of raw minerals from 2014
onwards.
The mining industry provides substantial export earnings, employment
opportunities and other economic activities. In 2011 the mining sector
contributed around 12 percent to Indonesia's GDP.

Culture

Culture Columns
Business Visit
Politics
Economy
General Economic Outline
Agriculture
Industry
Services
New Order Miracle
Asian Financial Crisis
Religion
Population
Tourist Guide

Today's Headlines

Credit Growth Indonesia: Banks Remain Selective in Disbursing New

Credit16 September 2016
Update Indonesia's Tax Amnesty Program, Singapore Banks to Police16
September 2016
Indonesia Posts USD $293.6 Million Trade Surplus in August 201615
September 2016
Analysis Indonesian Economy: What about Indonesia's Economy in 2017?
15 September 2016
Palm Oil Industry: Rising Biodiesel Consumption in Indonesia14 September
2016

Join Us

In-depth columns and analyses of Indonesia's sectors, companies and

commodities
Updates on political, economic and social matters
Access to investment projects
For investment ideas and how to realize them
Register

Advertising
Inquire About Advertising

Newsletter
Subscribe to our Newsletter
News

Today's Headlines
News Columns
News Flash Indonesia
Polls Indonesia Investments
Trade Expos & Exhibitions

Projects
Government Development Plans
Public-Private Partnerships
Private Projects
Public Projects

Finance
Financial Columns
Indonesia Stock Exchange
Stocks & Bonds
Tax System

Macroeconomic Indicators
Contacts

Business
Business Columns
Indonesian Companies
Commodities
Industries & Sectors
Risks
Foreign Investment
Working & Living
Business Platform

Culture
Culture Columns
Business Visit
Politics
Economy
Religion
Population
Tourist Guide

Indonesia Investments
Who We Are
Writers' Team
Contact
Join Us

Connect with us
Facebook
Twitter
Google+

Newsletter
info@indonesia-investments.com
Privacy and Security
Sitemap
Terms of Use
Disclaimer
Copyright Van der Schaar Investments B.V. Delft The Netherlands