Indonesia and Singapore have taken a concrete step to deepen regional manufacturing integration through a strategic cooperation agreement between the Indonesian Industrial Estates Association (HKI) and the Singapore Manufacturing Federation (SMF). Signed on the sidelines of the Manufacturing Day Summit in Singapore, the memorandum of understanding is aimed at strengthening cross-border industrial development, investment facilitation, and supply chain integration between the two countries.
The partnership is expected to deliver mutual benefits. For Singaporean manufacturers, Indonesia’s extensive network of industrial estates offers a cost-efficient and scalable base for production and exports. For Indonesia, the cooperation opens wider access to quality foreign investment, advanced manufacturing technology, and industrial talent development. HKI Chairman Akhmad Ma’ruf Maulana described the collaboration as more than a business arrangement.
“This partnership serves as a strategic bridge to bring in quality investment, technology transfer, and industrial talent development,” he said, as quoted by InvestorId, adding that HKI is ready to support Singaporean firms operating in globally competitive industrial zones across Indonesia.
This bilateral push comes as Indonesia’s manufacturing sector continues to show solid fundamentals. Manufacturing contributes more than 18% to national gross domestic product and remains a key engine for exports, employment creation, and downstream value-added industries. With 175 industrial estates located across strategic economic corridors, Indonesia has strengthened its position as one of Southeast Asia’s main production hubs and a preferred destination for industrial relocation.
Industrial Confidence Index Reaches New High
Industry sentiment is also improving. Indonesia’s Industrial Confidence Index (IKI) climbed to 54.12 in January 2026, the highest level since the index was introduced in late 2022, reflecting expansion across most manufacturing subsectors. The Ministry of Industry noted that rising confidence is supported by increased production activity ahead of major religious holidays and steady domestic demand.
“This achievement indicates stronger confidence among industry players regarding business prospects at the beginning of the year,” said Febri Hendri Antoni Arief, spokesperson for the ministry, as quoted by Liputan6.
Investment trends further underline the sector’s positive outlook. Manufacturing investment reached around USD 13.2 billion in the fourth quarter of 2025, accounting for nearly 44% of total national investment. Growth in capital goods imports also signals ongoing capacity expansion and machinery upgrades, suggesting manufacturers are preparing for sustained demand rather than short-term recovery.
Among the most promising subsectors, transportation equipment—including motor vehicles—and industrial machinery stand out. These segments are benefiting from improving domestic consumption, regional supply chain integration, and policy coordination aimed at strengthening industrial competitiveness. Their performance is expected to anchor manufacturing growth in 2026 while supporting higher value-added production.
As Indonesia and Singapore align their industrial strengths, the cooperation marks a shift toward deeper regional integration rather than isolated growth. With rising confidence, expanding investment, and targeted subsector development, Indonesia’s industrial estates are evolving into more than production zones—they are becoming gateways to ASEAN’s next phase of manufacturing growth.
Source: Liputan6, Investor.Id
Photo Credit: Shutterstock/Jasen Wright
