Indonesia’s manufacturing sector entered 2026 with solid momentum, as 1,236 industrial companies began production by mid-January. As of January 15, 2026, these newly operating firms are expected to employ 218,892 people, highlighting the sector’s resilience and its continued role as a key driver of national economic growth amid global economic uncertainty, according to Industry Minister Agus Gumiwang Kartasasmita.
For 2026, the government is targeting 5.51% growth in non-oil and gas manufacturing GDP, underscoring the sector’s strategic importance to the broader economy. The newly operating companies are those that reported construction progress in 2025 and were scheduled to reach full operational capacity this year.
The investments behind these projects are substantial. Total investment in the non-oil and gas manufacturing sector reached USD 35.1 billion, including USD 28.3 billion allocated to machinery and equipment outside land and buildings. These new production capacities are critical to safeguarding industrial supply, strengthening Indonesia’s manufacturing structure, and creating sustainable employment.
To sustain growth, the Ministry of Industry is accelerating industrial downstreaming, Industry 4.0 transformation, and stronger integration from upstream to downstream sectors. These efforts aim to ensure raw material availability while improving efficiency across national supply chains.
Domestic demand continues to be the backbone of Indonesia’s manufacturing growth, contributing around 80%, while exports account for the remaining 20%. The government is reinforcing the domestic market through import substitution policies, higher local content requirements, optimized government and state-owned enterprise spending on locally made products, and deeper integration of small and medium industries into national supply chains.
“We are ensuring that domestic industrial products become the main players in the local market. Strengthening domestic demand remains the primary anchor of manufacturing growth,” Agus said, as quoted by Antara.
Several subsectors are projected to see robust demand this year, including basic metals, driven by infrastructure projects and downstream processing; food and beverages, the largest contributor to manufacturing GDP; and chemicals, pharmaceuticals, and medicines, supported by rising healthcare and industrial chemical needs.
On the export front, the ministry aims for manufactured non-oil and gas products to account for 74.85% of total national exports in 2026, in line with the government’s 2025–2029 strategic plan. This will be pursued through market diversification, enhanced product competitiveness, and stronger global promotion efforts.
Employment absorption in the non-oil and gas manufacturing sector is targeted at 14.68% of the national workforce, with labor productivity estimated at around USD 8,000 per worker per year. To support these ambitions, total manufacturing investment in 2026 is projected to reach USD 54.3 billion.
Looking ahead, the ministry has introduced the New National Industrial Strategy to strengthen industrial foundations through forward and backward linkages connecting upstream industries, manufacturing, and services. Agus emphasized that the strategy is designed to ensure long-term competitiveness and tangible economic benefits.
“The New National Industrial Strategy serves as a reference for strengthening Indonesia’s industrial structure so it can deliver sustainable contributions to the national economy,” he concluded.
Source: AntaraNews
Photo Credit: Mandiri Abadi (pexels.com)
