ASIATODAY.ID, JAKARTA – As the global economy continues to face slowing growth and geopolitical uncertainty, Indonesia’s manufacturing sector is moving in the opposite direction.
The government has confirmed that 1,236 industrial companies are scheduled to begin first-time production in 2026, reinforcing manufacturing’s role as the backbone of the national economy.
Minister of Industry Agus Gumiwang Kartasasmita said Indonesia’s manufacturing sector continues to expand at above 5 percent and remains a key driver of economic growth.
“The manufacturing sector continues to grow above 5 percent and serves as the main engine of the national economy. We are optimistic that this performance can be maintained and further strengthened throughout 2026,” the minister said in Jakarta quoted on Monday, January 19, 2026.
1,236 New Factories to Come Online, Creating Nearly 219,000 Jobs
According to data from the Ministry of Industry as of January 15, 2026, 1,236 industrial firms completed their construction phase in 2025 and are scheduled to commence initial production in 2026.
The new production capacity is expected to:
– Generate 218,892 new jobs
– Be supported by IDR 551.88 trillion in investment in the non-oil and gas manufacturing sector
– Include IDR 444.25 trillion in investment excluding land and buildings.
“New production capacity coming on stream in 2026 will be a critical factor in safeguarding industrial supply, strengthening Indonesia’s manufacturing structure, and creating new employment opportunities,” Agus said.
Manufacturing GDP Growth Targeted at 5.51 Percent
For 2026, the government has set a 5.51 percent growth target for non-oil and gas manufacturing GDP, underscoring the sector’s strategic importance to Indonesia’s economic expansion.
Industrial policy will focus not only on maintaining growth momentum, but also on strengthening the industrial base through:
– Higher domestic value-added
– Deeper industrial integration
– Stronger upstream–downstream linkages
The government continues to accelerate industrialization, Industry 4.0 transformation, and supply-chain integration to improve efficiency and long-term resilience.
Domestic Market as the Main Growth Anchor
From the demand side, manufacturing growth in 2026 is expected to be driven by:
– Domestic demand: approximately 80 percent
– Exports: around 20 percent
To reinforce domestic demand, the Ministry of Industry is advancing import substitution policies, higher local content requirements, optimized government and state-owned enterprise procurement, and stronger integration of small and medium-sized industries into national supply chains.
“We are ensuring that domestically manufactured products become the primary choice in the domestic market. Strengthening domestic demand is the main anchor of manufacturing growth,” the minister said.
Key Subsectors Poised for Strong Growth
Several subsectors are projected to experience robust demand growth, including:
– Basic metals, supported by infrastructure development and downstream mineral processing
– Food and beverage, the largest contributor to manufacturing GDP
– Chemicals, pharmaceuticals, and medical products, driven by rising health awareness and expanding industrial demand
On the export front, non-oil and gas manufactured products are targeted to account for 74.85 percent of total national exports in 2026, in line with the Ministry’s 2025–2029 Strategic Plan.
Manufacturing Employment and Investment Outlook
The non-oil and gas manufacturing sector is projected to absorb 14.68 percent of Indonesia’s total workforce in 2026, with labor productivity targeted at IDR 126.20 million per worker per year.
To support these goals, total investment in the non-oil and gas manufacturing sector is targeted to reach IDR 852.90 trillion in 2026.
New National Industrial Strategy Under President Prabowo
To navigate rising global uncertainty, the Ministry of Industry has introduced the New National Industrial Strategy (NNIS) as a long-term policy framework to strengthen Indonesia’s industrial foundations.
The strategy is aligned with the priority agenda of President Prabowo Subianto, particularly in advancing:
– Food and energy self-sufficiency
– National industrial resilience
– Job creation
– Increased domestic value-added
The NNIS emphasizes forward and backward linkages to strengthen connections between upstream industries, manufacturing, and services, enhancing supply-chain efficiency and employment absorption.
“The New National Industrial Strategy serves as a reference for building a resilient, competitive, and sustainable industrial base. Strengthening upstream and downstream integration will enable domestic industries to support national self-sufficiency while meeting both domestic and global market demand,” Agus said.
With strengthened supply and demand dynamics, the government remains confident that Indonesia’s manufacturing sector will continue to grow above 5 percent in 2026, playing a central role in economic expansion, job creation, and global competitiveness despite ongoing global headwinds. (AT Network)
Follow Us at Google News and WA Channel