Manufacturing Industry Continues to be the Driving Force Behind Indonesia's GDP Growth

INTI,- The growth performance of Indonesia's non-oil and gas processing industry in Q1 2023 reached 4.67% (y-on-y). The manufacturing sector remains the main source of the national gross domestic product (GDP) structure, contributing 5.03% during the first three months of this year.

" The manufacturing sector remains the largest contributor to supporting the national economic growth in Q1-2023. Its contribution reached 16.77%, an increase from the previous period (Q4-2022) at 16.39%," said Industry Minister Agus Gumiwang Kartasasmita in Jakarta on Friday (5/5).

The Minister of Industry stated that the food and beverage industry has been growing above the country's economic growth rate for two consecutive quarters. Considering that the non-oil and gas processing industry's GDP structure is dominated by the food and beverage industry, which accounts for 38.6%, the industry has become the prime mover of Q1 2023's growth.

In addition, during Q1-2023, the transportation equipment industry showed the highest growth at 17.3%, followed by the basic metals industry (15.5%), and the metal, computer, electronic, optical, and electrical equipment industries (12.8%).

"The significant growth in the transportation equipment industry is driven by an increase in vehicle production to meet the demand for new vehicles before Lebaran and the increase in electric vehicle production," said Agus.

Meanwhile, the soaring growth in the basic metals industry was driven by a surge in foreign demand, especially for processed nickel products such as ferro-nickel, nickel matte, and nickel pig iron. "This is in line with the government's priority program to implement industrial downstreaming policies to increase the added value of domestic raw materials, which have a wide-ranging multiplier effect on the national economy," he explained.

The Minister of Industry is optimistic that Indonesia's manufacturing industry players still have high confidence in carrying out their businesses. This is because the government's determination to create a conducive business climate is supported by various strategic programs and policies.

"Although overshadowed by uncertain global conditions, it can be seen that the indicators on the Industrial Confidence Index (ICI) and the Indonesia Manufacturing Purchasing Manager's Index (PMI) released by S&P Global in April show expansionary levels. Since the Ministry of Industry launched the ICI last November, and for 20 consecutive months, our manufacturing PMI has remained in the expansion phase," he added.

Indonesia's Manufacturing PMI in April stood at 52.7, a significant increase from March's achievement at 51.9 levels. This business condition improvement was supported by strong domestic demand. This is in line with the Ministry of Industry's previously released ICI for April, which stood at 51.38.

Agus stated that the key and driving factors of industrial growth are the Industry 4.0 transformation, the utilization of technology to increase efficiency, thereby improving competitiveness, and human resources (HR) to increase industrial productivity.

"The Ministry of Industry also plays a role in providing competent industrial human resources, including establishing the Industry 4.0 Human Resource Development Center and implementing vocational education and training programs that are also based on Industry 4.0 to meet the needs of digital transformation," he said.

The Minister of Industry added that Indonesia has successfully become an official partner country at the prestigious international event, Hannover Messe 2023 in Germany. This world-class industrial technology exhibition becomes an important momentum for Indonesia to introduce several industrial sectors that have implemented digital transformation and build national branding on the international stage.

"Indonesia's participation as an official partner country at Hannover Messe 2023 also helps to increase Indonesia's manufacturing capabilities and digital infrastructure development. In addition, it is hoped that industries participating in the event can enhance their international market penetration and facilitate the exchange of technology, investment, and business cooperation," he concluded. ***. Hans