Challenges Facing Indonesia's Manufacturing Industry: Rigid Regulations and Global Competitiveness

JAKARTA, KOMPAS.com - Industry players assess that the country’s manufacturing industry is facing serious challenges. This situation has the potential to erode the competitiveness of the industry amid tight competition to attract global investment. Chairman of the Indonesian Furniture and Handicraft Industry Association (HIMKI), Abdul Sobur, stated that the challenges to the manufacturing industry do not only come from external factors, but also from domestic ones that have not fully supported the business climate. In global competition, a country’s attractiveness to investors is not determined solely by the size of its large market. Investors now evaluate more comprehensively, particularly on factors that directly affect business efficiency and certainty. Labour productivity is important because it relates to output and production costs. In addition, industrial flexibility determines how quickly companies can adapt to market dynamics. Logistics and energy costs are also considerations because they directly impact the cost structure, while policy consistency reflects the long-term stability needed by investors. “We are in a very tight global competition. Investment destination countries are not only viewed from the size of their domestic market, but also from labour productivity, regulatory certainty, industrial flexibility, logistics costs, energy, and policy consistency,” Sobur said in a press statement on Wednesday (29/4/2026). However, protection needs to be placed in balance with the need to increase productivity, efficiency, and industrial flexibility. “Labour protection is a principled matter. But in the context of the manufacturing industry, that protection must go hand in hand with increasing productivity and industrial flexibility. Without such balance, Indonesia risks losing its global competitiveness even more,” he explained. Labour policies such as regulations on leave, work from home, and wage protection need to consider the characteristics of each sector.