Indonesia is today one of the top 10 largest manufacturing nations in the world, defined by output. The manufacturing sector employs more than 25 million workers and accounted for ~20% of Indonesia’s GDP in 2017, totaling roughly USD 203 billion. The sector has seen 6-7% growth annually for several years and is the backbone of the Indonesian economy. To boost the growth of the manufacturing sector further, the Indonesian government has adopted a number of reforms which include establishing industrial zones and providing tax holidays. It has also made efforts to reduce cumbersome and stifling bureaucracy. Additionally, the Indonesian government has adopted an Industry 4.0 implementation roadmap. The roadmap aims to improve the flow of goods, empower SMEs, increase foreign investments, strengthen the national digital infrastructure and sharpen the quality of human resources. Implementing the roadmap will generate new opportunities in automation and robotics, IoT, advanced production methods, human machine interface and AI, to name just a few areas.
Making Indonesia Industry 4.0
Industry 4.0 is supported by five key technological advances: Internet of things, artificial intelligence, human-machine interface, robot and sensor technology, and 3D printing.
The world is now experiencing Industry 4.0 and therefore Indonesia needs to be well prepared to join the new trend. Industry 4.0 is expected to result in very rapid and wide transformations. As such, countries, including Indonesia, need to be ready.
Indonesian Government is enthusiastic about Industry 4.0 and is optimistic that the transformation will lead to more jobs – rather than job shedding – on the Indonesian market. Moreover, he regards Industry 4.0 as an opportunity for Indonesia to enter the top ten of biggest global economies by 2030 as it should lead to a boost in exports. Furthermore, President Jokowi emphasized the importance of safeguarding inclusive economic growth, shared by all portions of society.
“Making Indonesia 4.0 roadmap, which is led by the Industry Ministry, is an important element on the national agenda. Therefore, all sides have to support this roadmap and contribute to a more successful and developed nation” (The President Jokowi)
The Ministry of Industry of Republic of Indonesia expects to see quick results. If successful, then the roadmap will boost the real economy of Indonesia by between 1 – 2 percent. Hence, in the period 2018-2030 Indonesia’s GDP growth rates should be at least 6-7 percent per year. Meanwhile, the manufacturing industry is targeted to contribute between 21-26 percent to the nation’s GDP by 2030. Meanwhile, on the back of the thriving manufacturing industry and export performance, job creation through the roadmap is estimated at 7-19 million by 2030.
Indonesia’s roadmap also involves ten cross-sectoral national initiatives:
- Improve the flow of goods
- Develop a roadmap for comprehensive and cross-sectoral industrial zones
- Improve sustainability standards
- empower the small and medium-sized entrepreneurs
- Build national, digital infrastructure
- Attract foreign investment
- Boost the quality of local human resources
- Boost the development of ecosystem innovation
- Design incentives for investment in technology
- Harmonize regulations and policies