The manufacturing business in Indonesia has the potential to become one of the world’s manufacturing leaders. Learn the reasons why and where to start a manufacturing business in Indonesia.
Indonesia is one of the biggest countries in the world. Indonesia has a lot of potential in different aspects of business, including the development of manufacturing businesses. The economic increase in Indonesia is happening because it shifted its role from a commodity-based country to a manufacturing-based country.
A Glimpse of Business Manufacturing in Indonesia
Ministry of Investment/BKPM documented the top five sectors that contributed to Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI) in the first quarter 2022 in Indonesia are Metal Industry, Metal-Based Goods, Non-Machinery and Equipment Industry (IDR 39.7 trillion, 14.0%), Transportation, Warehouse, and Telecommunication (IDR 39.5 trillion, 14.0%), Mining (IDR 35.2 trillion, 12.5%), Housing, Industrial Estate, and Office Building (IDR 24.9 trillion, 8.8%), and Electricity, Gas, and Water Supply (IDR 23.1 trillion, 8.2%).
The manufacturing sector still plays a very important role in increasing investment realization and remains a driver of economic growth.
The top five locations where FDI and DDI occurred are Special Territory of Jakarta (IDR 40.4 trillion, 14.3%), West Java (IDR 39.5 trillion, 14.0 %), Riau (IDR 23.7 trillion, 8.4%), East Java (IDR 23.6 trillion, 8.4%), and Central Sulawesi (IDR 20.0 trillion, 7.1%).
The top five country of origin for FDI are Singapore (US$ 3.6 billion, 34.8%), Hong Kong (US$ 1.5 billion, 15.0%), China (US$ 1.4 billion, 13.2%), Japan (US$ 0.8 billion, 8.0%), and United States of America (US$ 0.6 billion, 6.1%).
The Advantages of Starting Manufacturing in Indonesia
- Economic GrowthDespite Gross Domestic Product (GDP) growth declines due to the pandemic in 2020 and 2021, Indonesia GDP remains above USD 1 trillion and has shown signs of recovery.
Economic improvements persisted in nearly all economic sectors in the second quarter of 2022, primarily driven by the Manufacturing Industry, Transportation and Storage as well as Wholesale and Retail Trade.
- Revitalizing the Infrastructure of Manufacturing in IndonesiaIndonesia has started to revitalize its manufacturing business and industry from different aspects, including infrastructures. Many industrial areas such as the Suryacipta City of Industry and Subang Smartpolitan are being built around the country. The industrial areas were equipped with the world-class infrastructures and facilities to make the entire process of building manufacturing businesses easier.
- Reduced Production CostsCompared with other countries, Indonesia has lower production costs – which generates higher profits. In fact, the cost of labor in Indonesia is more competitive than in China.
- Human ResourceThe abundant number of human resources in this country is one of the reasons behind the growth of manufacturing in Indonesia. Indonesia is the 4th largest population country in the world, so it will surely never run out of human resources to work in the manufacturing business and factories.
Indonesian Manufacturing Location Establishment
Well located in the industrial belt and have become the most sought-after investment destination in Indonesia, Suryacipta City of Industry, an industrial estate owned by PT Suryacipta Swadaya (Suryacipta) – become a home to over 151 prestigious domestic and international companies from across the globe.
Both developments greatly benefit from direct access to surrounding world-class infrastructures including airports, seaport, and toll roads network infrastructure ensuring ease of accessibilities to Jakarta as well as other major markets in the country.
Contact our sales team for more information on starting a manufacturing business in Suryacipta.