The positive growth trend of the non-oil and gas processing industry since 2021 continued through 2023. Growth was 4.67 percent in Q1-2023, 4.56 percent in Q2-2023, and rose to 5.02 percent in Q3-2023, exceeding national economic growth.
“This proves that we have been able to keep industry growing positively amid turbulence and challenges, including global impacts. Compared with neighboring countries and other advanced industrial nations, we have come through 2023 better,” Minister of Industry Agus Gumiwang Kartasasmita said at the 2023 Year-End Media Gathering in Denpasar, Bali, on Thursday (28/12).
The Minister stressed that Indonesia is not deindustrializing, as shown by industry's contribution remaining the highest among economic sectors. “The non-oil and gas processing industry's contribution to GDP in Q3-2023 was 16.83 percent,” he said.
Another indication is the continued rise in non-oil and gas processing industry exports, even amid unstable global economic conditions. Industrial exports in January–November 2023 reached USD 171.23 billion, or 72.43% of total national exports. “Industrial exports remain dominant and are the backbone of national economic growth,” he added.
Realized investment in the non-oil and gas processing industry through Q3-2023 was IDR 413.05 trillion, up 20.41 percent from IDR 343.05 trillion in the same period of 2022.
“Realized investment through Q3-2023 is higher than in 2019–2021, and we hope it can exceed 2022. This shows Indonesia's investment climate is improving for businesses,” he explained.
Agus said the non-oil and gas processing industry employed 19.29 million people in 2023, the highest compared with 2019–2022. “This employment also shows that industry remains the main attraction of Indonesia's economy,” he said.
According to Agus, these positive results are in line with the Industrial Confidence Index (IKI) throughout 2023. Since IKI was launched in November 2022, it has fluctuated but remained in expansion, standing at 51.32 in December 2023. “All these macro developments show we have succeeded in keeping industry productive and competitive amid the global economic recovery,” he explained.
In addition, the strong performance of national manufacturing has been supported by the Ministry of Industry's strategic programs and activities, such as the Program to Increase the Use of Domestic Products (P3DN), Natural Resource Downstreaming, Small and Medium Industry (SMI) Development, Halal Industry Facilitation and Development, Building the Phytopharmaceutical Ecosystem, Industrial Decarbonization Policy, Industrial Machinery/Equipment Restructuring, and Industrial Human Resource Development.
“In 2023, Kemenperin received various awards, including an Unqualified Opinion (WTP) on its financial statements from the BPK for the 15th time since 2008, First Place in the Reksa Bandha Award for State Property Reporting Quality (Group III), and Third Place in the 2023 Subroto Award for Energy Efficiency from the Ministry of Energy and Mineral Resources,” he said.
Other awards include the Public Information Disclosure Award as an “INFORMATIVE” Public Body from the Central Information Commission, the Corruption-Free Zone (WBK) designation for three work units (Politeknik STMI Jakarta, Politeknik ATI Makassar and the TPT Industry Community Academy Surakarta) at the 2023 Integrity Zone Awards from the Ministry of PAN-RB, and the Public Service Compliance Assessment designation in the Green Zone, High Quality category with a score of 85.92 from the Indonesian Ombudsman.
2024 targets
On the same occasion, the Minister said his side has identified various constraints and challenges from geo-economic and geopolitical impacts that are likely to continue in 2024. First, global economic growth is expected to slow due to weaker growth in China and Europe, weakening global demand and demand for products.
Second, currency depreciation is expected due to monetary policies in advanced economies raising interest rates to curb inflation. Third, if the Ukraine–Russia and Palestine–Israel conflicts drag on, they could disrupt regional stability and trigger rises in commodity, food and energy prices.
Next, fourth, the elections on one hand have a positive impact on national industry, but on the other investors may take a wait-and-see stance until the definitive President and Vice President are inaugurated.
“Even so, we remain optimistic about 2024. With hopes for improving global and national economic conditions, we estimate non-oil and gas processing industry growth of 4.81 percent in 2023 and target 5.80 percent in 2024,” the Minister said.
In line with this, the non-oil and gas processing industry's contribution is projected at 16.91 percent in 2023, with a 2024 target of 17.90 percent. “Non-oil and gas processing industry exports are estimated at USD 186.40 billion in 2023 and targeted to reach USD 193.4 billion in 2024,” he said.
Meanwhile, investment in the non-oil and gas processing industry is estimated at IDR 571.47 trillion in 2023, with a 2024 target of IDR 630.57 trillion. “Employment in the non-oil and gas processing industry will reach 20.33 million people in 2024,” he said.
To achieve these targets, the Minister said his side is ready to roll out several priority programs in 2024, such as machinery and/or equipment restructuring for the wood processing, food and beverage and textile industries and for small and medium industry players, and continued downstreaming of natural resources in three sectors: agro-based, mining and mineral-based, and oil, gas and coal-based industries.
Next, to support green economy policies and industrial decarbonization, Kemenperin continues to spur green industry development to increase the efficiency and effectiveness of sustainable resource use. Kemenperin will also strengthen the growth and development of technology-based startup SMIs.
There is also free certification facilitation for domestic industrial companies through the Center for Increasing the Use of Domestic Products, including in medical devices, agricultural tools and machinery, pharmaceuticals, machinery, electronics and telematics, metals, electrical equipment, chemicals, fertilizers, automotive and components, ceramics, cement and textiles. Kemenperin also continues to encourage the growth of the halal ecosystem and strengthen the competitiveness of national products through the Halal Industry Facilitation and Development Program.
Source: Press Release of the Ministry of Industry of the Republic of Indonesia