Government Denies Indonesia Is Undergoing Deindustrialization Phase

TEMPO.CO, Jakarta - Industry Minister Agus Gumiwang Kartasasmita denied that Indonesia has entered the deindustrialization phase. He claimed that Indonesia's manufacturing industry is still the main driver of national economic growth.

The Golkar Party politician explained that the value from the manufacturing sector and its share of the gross domestic product (GDP) are still relatively high. He also stated that investment, exports, and employment absorption in the manufacturing sector show promising performance. "It is easy to argue that Indonesia is not in the deindustrialization phase," said Agus Gumiwang in a written statement on Friday, May 9, 2025.

Based on data from the World Bank and the United Nations Statistics, Agus Gumiwang mentioned that Indonesia's manufacturing value added (MVA) in 2023 reached US$255.96 billion, positioning Indonesia among the top 12 manufacturing countries in the world. In ASEAN, Indonesia's MVA value surpasses other countries, including Thailand and Vietnam.

Meanwhile, the Central Bureau of Statistics (BPS) reported that the contribution of the non-oil and gas processing industry sector to the national economy increased by 17.50 percent in the first quarter of 2025, up from 17.47 percent in the same period in 2024 and higher than the 17.16 percent contribution throughout 2024.

Agus Gumiwang added that the contribution of the non-oil and gas processing industry to the economy has been on an upward trend since the second quarter of 2022, post-COVID-19, until the first quarter of 2025. "Based on our technocratic analysis of the quarterly GDP data of this sector, we found a statistically significant increasing trend in the share of GDP," said Agus Gumiwang.

Therefore, Agus Gumiwang suggested questioning the reasons behind analysts claiming that Indonesia is entering or has already entered the deindustrialization phase. "That is wrong, because we can see from the current data that the performance of the manufacturing industry continues to be a source of economic growth," he said.

As for the global rating agency, Standard & Poor's Global Ratings (S&P) released the latest data on Indonesia's Purchasing Managers' Index (PMI) for the manufacturing sector. The Indonesian Manufacturing Index in April 2025 dropped to 46.7, indicating a contraction zone.
S&P noted the contraction was due to a sharp decline in production volume and new demand.

Despite being battered by imported products and layoffs throughout 2024, the manufacturing industry is predicted to maintain stagnant growth this year. Economist Bright Institute Awalil Rizky estimated that the contribution of the processing industry is likely to persist. "Affirming that deindustrialization has not yet been able to be reversed into reindustrialization," he told Tempo on Sunday, January 19, 2025.

Editor's Choice: Tracking Indonesia's Trade Performance with India and Pakistan

Click here to get the latest news updates from Tempo on Google News

Bill Gates' TB Vaccine Trial in Indonesia Is Not Guinea Pigs, Says Government

24 menit lalu

Indonesia's Anti-Online Gambling Task Force Has Tackled 1,271 Cases, Says Police Chief

3 jam lalu

Soviet-Era Spacecraft Kosmos 482 Could Crash in Indonesian Territory, BRIN Says

3 jam lalu

Indonesian Govt Urges Waste Facilities to Stop Using Chimneys; Here's Why

19 jam lalu

Over 11% of People with Disabilities in Indonesia Live Below the Poverty Line

20 jam lalu

Cardinal Suharyo Represents Indonesian Hospitality at Vatican Conclave

22 jam lalu

Tracking Indonesia's Trade Performance with India and Pakistan

22 jam lalu

Indonesia Targets US Tariff Talks to Complete in 90 Days

22 jam lalu

2026 World Cup Qualifiers: Japan to Rotate Squad Against Indonesia

22 jam lalu

Bill Gates-Funded TB Vaccine Trial in Indonesia Enters Phase 3

23 jam lalu