The manufacturing industry sector has an investment value of Rp167.1 trillion in the first semester of 2021 (which increased) to Rp230.8 trillion in the first half of 2022, or a double-digit increase of 38 percentJakarta (ANTARA) - Investment in the manufacturing sector increased to Rp230.8 trillion (US$15.4 billion) in the first half of 2022 from Rp167.1 trillion (US$11.2 billion) in the corresponding period of 2021, Industry Minister Agus Gumiwang Kartasasmita has informed.
The figure accounted for 39.5 percent of the total investment value, which was recorded at Rp584.6 trillion (US$39 billion) in the first half of 2022.
"The manufacturing industry sector has an investment value of Rp167.1 trillion in the first semester of 2021 (which increased) to Rp230.8 trillion in the first half of 2022, or a double-digit increase of 38 percent," Minister Kartasasmita noted here on Saturday.
So far, increased investment in the industrial sector has always had a profound impact on the national economy, he said. In addition to increasing foreign exchange and employment, it also improves the manufacturing structure so that Indonesian industries can become more competitive.
"Indonesia is still an investment destination because it is supported by a large market potential and pro-business government policies for business players, including efforts to accelerate national economic recovery due to the impact of the COVID-19 pandemic," the minister elaborated.
The government is committed to improving the conducive state of the business and investment climate in a consistent manner, as well as controlling the pandemic so that investment can keep increasing, Kartasasmita said.
"Besides that, domestic demand is getting better, alongside the community activities dynamics that have grown flexible, as well as the expedition of booster vaccines for the community and industrial workers, which guarantees interest of investors to expand in the country," he added.
According to data from the Investment Ministry, in January–June 2022, domestic investment (PMDN) in the industrial sector reached Rp65.2 trillion (US$4 billion), accounting for 23.8 percent of the total PMDN of Rp274.2 trillion (US$18.3 billion).
Meanwhile, foreign investment in the industrial sector reached Rp165.6 trillion (US$11 billion), accounting for 53.4 percent or the largest chunk of the total FDI (foreign direct investment) of Rp310.4 trillion (US$20.7 billion).
“Investors are currently targeting more productive sectors, such as the manufacturing industry, compared to other sectors. Therefore, in addition to encouraging the capital-intensive industrial sector for technology transfer, we are also encouraging the labor-intensive industrial sector in a bid to increase job vacancies in the country," Kartasasmita informed.
During the first half of 2022, the manufacturing sector that recorded the highest domestic capital investment was the food industry, with a value of Rp24.2 trillion (US$ 1.6 billion), up 8.8 percent on an annual basis.
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The industries that drew the largest FDI were the base metal, metal goods, non-machinery and equipment industries, which recorded an investment of US$5.7 billion, up 26.3 percent, and the chemical and pharmaceutical industry, which raked in US$1.8 billion in investment, or up 8.1 percent.
“Cumulatively, for domestic capital investment and foreign domestic investment in the first semester of 2022, the most dominant investment in the manufacturing sector was (seen in) the basic metal industry, metal goods, non-machinery and equipment, valued at Rp87.9 trillion (US$5.9 billion) or an increase of 15 percent (yoy), followed by the food industry of Rp42 trillion (US$2.8 billion) or an increase of 7.2 percent," the minister noted.
According to Kartasasmita, the government's policy to pursue industrial downstreaming and stop exports of raw materials could potentially lead to an increase in investment, particularly in the smelting and refinery industry.
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“Smelter factories are starting to pop up in a number of areas outside Java. This means it will encourage economic equity or be in line with Indonesia-centric development," the minister opined.
In addition, efforts are needed to make Indonesia a country with eco-friendly industries because nowadays, the global community is tending to choose products from industries that use new and renewable energy.
"In addition to efforts to increase the added value of domestic raw materials through industrial downstreaming, we are also committed to pursuing the development of green industries and building an electric vehicle ecosystem. This is in line with the priority program of the Making Indonesia 4.0 road map, with a target of reaching the Top 10 countries with the strongest economies in the world by 2030," the minister added.
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Translator: Sella P G, Mecca Yumna
Editor: Fardah Assegaf
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