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BRICS+ Series: Indonesia Joins the World's Top 10 Manufacturing Nations
This handout picture taken and released on July 3, 2024 by the Indonesian Presidential Palace shows Indonesian President Joko Widodo (R) speaking with Hyundai Motor Group Executive Chairman Chung Eui-sun (C) during an inspection of the battery and electric vehicle manufacturing plant by PT Hyundai LG Indonesia-Green Power in Karawang, West Java.
Indonesia's Manufacturing Global Ambitions
The manufacturing sector constitutes a significant portion of Indonesia's economy, contributing 20% to the GDP and thereby playing a pivotal role in the nation's economic advancement. The majority of manufacturing operations are concentrated on the island of Java, which is home to 60% of the national population and generates 58% of the country's revenue.
Indonesia's Manufacturing Growth & Key Sectors
Overall, Indonesia's manufacturing sector has demonstrated consistent positive growth of 4% since 2016, despite the COVID-19 setbacks from the lockdown regulations, today the industry is ranked as the 12th largest manufacturer globally; and by 2030 the government has plans to elevate the country into the top 10 biggest economies and aiming to become a global manufacturing hub according to the Making Indonesia 4.0 strategy. One of the main areas of production include textiles, chemicals, electric vehicles (EVs), and food processing. Currently, manufacturing makes a major contribution as a source of employment, with the expansion of production, Indonesia stands to play an increasingly critical role in the various small and medium-sized enterprises which represent the majority of the sector.
Government Initiatives: Making Indonesia 4.0 & Investment Attraction
In order to achieve government-mandated goals such as manufacturing contributing 28% to GDP by 2045, there have been efforts to attract foreign investment for companies to operate in Indonesia's manufacturing hubs, thus supporting the increased market presence in the global supply chain.
The country's geographic location is greatly beneficial in this capacity because of the Strait of Malacca- a vital channel for trading routes connecting the Pacific Ocean to the Indian and the South China Sea.
BRICS+ Membership: Opportunities & Trade Expansion
Following Indonesia's recent membership to BRICS+, the proximity the country has to the popular sea route makes for increased commercial activity which boosts the country's shipping, port and other coastal services. It is significantly important for its strategic geopolitical and economic characteristics, but also for security measures. By virtue of the BRICS+ bloc representing a large market, Indonesian membership could significantly increase the volume of trade flowing through or into the country. Secondly, aligned with the bloc's founding values, they seek to reshape the global economy and world order by ensuring that emerging markets and countries have a greater more equitable voice in international affairs, Indonesia has a great opportunity to influence sea trade interests, commodity pricing and global trade policies, especially considering that they recently had a trading surplus in February 2025 increasing to $3.12 billion (USD), a substantial raise from $0.83 billion the year before.
Key Trade Partners & South-South Cooperation
Some of the top exporting destinations that Indonesia trades with are China, the USA, India, Japan and Singapore. The top importing countries are China, USA, Japan, South Korea and Singapore. This is to potentially change because of the BRICS+ agenda promoting greater South-South cooperation to foster economic exchange and growth. China and India pose the greatest strengths in this capacity regarding the BRICS nations. China is recognised as the world's leading manufacturing nation, possessing substantial expertise in restructuring the global supply chain to be heavily centered around its operations. Furthermore, both China and India, the latter being the most populous country globally, possess vast consumer markets attributable to their large populations. India is home to a rapidly growing middle class and thus, increasing purchasing power- pivotal to the BRICS+ bloc financial cycle. Complementing this is New Delhi's robust service, telecommunications and information technology (IT) industries whose expertise can be great collaboration avenues to Indonesia for skill transfers.
Challenges & The Road Ahead
Indonesia aims to be a leader in manufacturing automation technologies. However, its current lack of skilled workers and infrastructure will need to be addressed to reach this goal.
Recent data indicates that Indonesia's manufacturing growth is moderating. In March 2025, Indonesia's Manufacturing Purchasing Managers' Index (PMI) declined to 52.4 from 53.6 in February, signaling that while the sector is still expanding, the pace has slowed. However, foreign demand remains strong amidst rising input costs and the current volatility of international trade with the ongoing tariff wars initiating from the USA could host broader economic implications on future growth.
Indonesia's strategic decision to diversify its international presence through BRICS+ membership significantly enhances the nation's prospects for realising its global manufacturing ambitions. This alliance presents opportunities to foster collaborative partnerships, bolster economic sovereignty by mitigating import dependency on raw materials, and solidify Indonesia's standing as a prominent industrial force on the world stage.
Written by:
*Dr Iqbal Survé
Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN
*Banthati Sekwala
Associate at BRICS+ Consulting Group
Egyptian & South African Specialist
**The Views expressed do not necessarily reflect the views of Independent Media or IOL.
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