Indonesia to Improves Manufacturing Sectors to Become Developed Countries
The report entitled “Policies to Support the Development of Indonesia ‘s Manufacturing Sector during 2020–2024” analyzes Indonesia’ growth prospects during 2020–2024, specifically whether or not the seven percent growth rate can be achieved.
“Indonesia wants to become an upper-middle income economy in the next fifteen years. The findings of ADB-Bappenas indicate that the structure of the Indonesian economy, which is still based on agriculture, natural resources, as well as simple manufacturing and services, does not allow us to achieve a higher growth rate,” he noted.
He added, that Indonesia’s manufacturing sector is currently not diversified and only exports relatively few types of products, even though in 2018 it reached an investment realization of Rp 222.3 trillion (US$ 15.88 billion).
The minister explained that Indonesian companies are indeed connected to the global value chain, but most are only suppliers of natural resources. In addition, the current portion of manufacturing employment in overall employment is lower compared to the economies of high-income Asia decades ago.
As stated in the report, governments and economic partners need to discuss ways to diversify and improve the manufacturing sector, modernize industrial policies, and the role of fiscal and monetary policies in supporting higher growth rates.
As reported before, Indonesia’s economic growth since 2014 has not experienced a significant increase. In 2014 the Indonesian economy only grew 5.01 percent, lower than 2013 at 5.56 percent. Then in 2015 it dropped to 4.48 percent.
Meanwhile, ADB Economic Research and Regional Cooperation Department Jesus Felipe, said that to increase product diversification and increase economic growth, the Indonesian government must revitalize the manufacturing sector through more effective cooperation with the private sector.
Felipe stressed that ADB is committed to achieving a prosperous, inclusive, resilient and sustainable Asia and Pacific, and continues its efforts to eradicate extreme poverty, including Indonesia.
“The analysis and recommendations in this report will be an important input for the 2020-2024 development agenda,” he concluded.