Manufacturing in Indonesia – Industries that have already set their footprints in KIP
With exports worth US$13.8 billion in 2019, Indonesia’s textile and garment industry exhibited considerable growth making it one of the world’s largest textile producers. The country produces 30% of its total output for domestic consumption, with the rest going to export markets such as the United States (36%), the Middle East (23%), the European Union (13%), and China (5%). By 2030, the government hopes to steer the country into the top five largest textile producers in the world.
Indonesia’s furniture industry is largely influenced by labour-related activities, as a result it has been designated as a priority sector. The furniture sector clocked US$779 million in revenue in 2018. With an annual growth rate of 19.1%, the revenue of 2022 is projected to be US$1,568 Million. The value of Indonesian furniture exports to the United States (US) increased to US$ 582.11 million in January-May 2020, compared to US$ 384.82 million in the same period last year.
Food and Beverage Industry
The F&B sector has received foreign investments worth IDR 293 trillion in the last five years. Despite diminishing demand due to the pandemic, the sector’s Year-on-Year growth rate clocked 3.94% and 0.22% in the first and second quarter of 2020 respectively.
In Q1, FDI realization in the Food Industry accounted for US$968.3 million of investment value and is projected to reach US$2,471 million of revenue by the end of this year.
Approximately 1.5 million autoworkers in the country are qualified as skilled workers, promising productivity at a lower input cost. Fitch Solutions research shows that Indonesia still provides attractive growth opportunities for new and existing automakers, scoring 73.2 out of 100 on its vehicle production growth indicator based on the firm’s five-year average forecast. The score is higher than Asia’s average regional score of 50.5 on the same indicator.
Electronic Manufacturing in Indonesia
The overall export value of electronic and telematics products reached US$7.8 billion during 2019. Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 9.86%, resulting in a projected market volume of US$9.8billion by 2025. The 10 main destination countries were Singapore, the United States, Japan, Germany, Vietnam, Hong Kong, Malaysia, China, Thailand, and The Philippines.
The Indonesian freight and logistics market is expected to witness a CAGR of 10.27% during the forecast period (2020-2025). Technology and e-commerce have made important contributions to the logistics industry. Between 2015 and 2019, the value of e-commerce increased by 88 percent to US$21 billion. According to Google and Temasek, the figure will quadruple to $82 billion by 2025. As a result, a number of local businesses, as well as international investors and developers are competing to break into this mushrooming industry.