Indonesia Manufacturing Reclaims Role as Growth Engine

JAKARTA, Investortrust.id — Industry Minister Agus Gumiwang Kartasasmita said Indonesia’s manufacturing sector had regained its role as the main engine of economic growth after more than a decade, as industrial output expanded faster than the broader economy in 2025.

The manufacturing sector grew 5.30% last year, exceeding Indonesia’s overall economic growth of 5.11%, marking the first time in 14 years that industrial expansion outpaced national GDP growth.

“This momentum is important because it is happening at the beginning of President Prabowo Subianto’s administration, which has placed industrialization as a national strategic agenda,” Mr. Agus said at a forum on revitalizing Indonesia’s shipbuilding and shipping industries in Jakarta on Tuesday, Feb. 10, 2026.

He delivered the remarks at a seminar jointly organized by the Indonesian National Shipowners’ Association and the Indonesian Shipbuilding and Offshore Association, with support from Kadin Indonesia.

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The event was also attended by Finance Minister Purbaya Yudhi Sadewa, Indonesian National Shipowners’ Association Vice Chairman Go Darmadi, and Deputy Trade Minister Dyah Roro Esti Widya Putri.

Structurally, the rebound in manufacturing growth suggested Indonesia was not undergoing deindustrialization, Mr. Agus said, but was instead entering a phase of industrial consolidation after years of adjustment.

Manufacturing’s contribution to gross domestic product has steadily increased, rising from 18.34% in 2022 to about 19.07% in 2025, with total output reaching Rp 4,541 trillion, equal to about $283 billion.

That performance highlighted the resilience of Indonesia’s industrial base despite mounting global pressures, including weaker world trade and rising protectionism across major economies.

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Indonesia’s strengthening position was also evident in global rankings.

Based on World Bank data, Indonesia ranked 13th globally in manufacturing output in 2024, with Manufacturing Value Added of roughly $265.07 billion, placing it ahead of several major emerging economies.

Indonesia’s MVA exceeded that of Türkiye, which recorded $218.58 billion, and Saudi Arabia at $192.67 billion, reinforcing Indonesia’s status as one of the world’s leading emerging manufacturing hubs.

However, Agus acknowledged that Indonesia still trailed far behind the world’s largest industrial economies.

China topped the global ranking with Manufacturing Value Added of about $4.66 trillion, followed by the United States at $2.91 trillion and Japan at $867.11 billion.

Germany, Europe’s manufacturing powerhouse, ranked fourth with MVA of $829.95 billion, nearly three times Indonesia’s current level.

Even so, Indonesia’s position was broadly comparable with a group of mid-tier industrial economies, including Brazil, which ranked 12th globally with $269.83 billion in MVA.

Indonesia’s manufacturing output also stood within striking distance of advanced European economies such as the United Kingdom, France, and Italy, each posting MVA figures in the range of $290 billion to $345 billion.

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At the regional level, Indonesia’s dominance was far more pronounced.

Indonesia ranked first in Southeast Asia in Manufacturing Value Added, with output of $265.07 billion, more than double that of Thailand, which ranked second at $128.44 billion.

Vietnam followed in third place with $116.38 billion, while Malaysia recorded $94.93 billion and Singapore $88.40 billion.

Other ASEAN economies lagged far behind.

The Philippines posted MVA of $72.37 billion, while Myanmar, Cambodia, Brunei, Laos, and Timor-Leste each recorded figures below $20 billion.

Timor-Leste, the region’s smallest manufacturing base, registered MVA of just $0.04 billion, underscoring Indonesia’s overwhelming industrial scale within ASEAN.

Agus said Indonesia’s relatively deep industrial structure provided a key competitive advantage over peers such as Thailand.

He noted that Indonesia’s industrial capacity was estimated to be about 22 times larger than Thailand’s when measured across multiple manufacturing subsectors.

With consistent industrialization strategies, disciplined policy execution, and long-term financing support, the government believed Indonesia could gradually narrow the gap with Asia’s top manufacturing nations.

Domestic demand remained a critical pillar of the sector’s strength.

Around 78% to 80% of Indonesia’s manufacturing output was absorbed by the domestic market, while the remaining 20% was exported.

This structure demonstrated both the resilience of Indonesia’s large internal market and the untapped potential for expanding exports of competitive manufactured products.

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Agus said future policy would focus on deepening industrial value chains, strengthening logistics and shipping capacity, and expanding downstream industries to boost productivity and job creation.

He emphasized that industrial growth under the Prabowo administration was expected to deliver direct benefits to households, including employment opportunities, income growth, and stronger economic resilience.

“The goal is not just growth for its own sake, but industrial development that creates jobs, strengthens national self-reliance, and improves the welfare of the people,” Agus said.