Government and Business Community Devise Strategies to Support the Manufacturing Sector

The government and business community are devising strategies to support the manufacturing sector amid declining production and weakening global demand that are increasingly pressuring industrial performance. It is undeniable that, with the ongoing conflict in the Middle East, the processing industry, particularly manufacturing, is experiencing the most significant impact due to supply chain disruptions. Limitations in raw materials, rising input prices, and logistical barriers could pressure production and distribution rates. Nevertheless, this sector is one of the main pillars relied upon to support economic growth. With its substantial contribution to Gross Domestic Product (GDP), job creation, investment, and national exports, the sector plays a strategic role in creating added value and expanding employment opportunities. In 2025, the processing industry’s growth was recorded at 5.30%, surpassing the national economic growth of 5.11%, indicating a positive sign for strengthening the economic structure ahead. Therefore, the government continues to take anticipatory measures to ensure the sustainability of industrial activities. On the policy side, President Prabowo Subianto has issued Presidential Decree (Keppres) No. 4 of 2026 on the Task Force for Accelerating Government Programmes to Support Increased Economic Growth. This policy is expected to speed up the implementation of priority programmes and address obstacles faced by business actors and investors. “The core of this is accelerating programmes to boost the economy, but it is very effective because, besides discussing at the policy level, we also hold economic interests,” said Secretary of the Coordinating Ministry for the Economy Susiwijono Moegiarso at the Business Indonesia Forum: Indonesia Emas 2045, Manufacturing Must Be the Commander, quoted on Sunday (3/5/2026). The government, he said, has prepared various mitigation policies to support the processing industry, including facilitating access to raw materials and adjusting import policies to maintain production continuity. The government is also continuously monitoring the most affected industrial sectors to ensure that policy responses can be carried out quickly and on target. In addition, macroeconomic stability remains a top priority, particularly in maintaining inflation, exchange rates, and public purchasing power. Fiscal and monetary policies continue to be synergised to support economic activities without ignoring prudence principles. These efforts are expected to maintain a conducive business climate and encourage investment in the processing and manufacturing industries. “We must anticipate these supply chain disruptions together because their impact could spread to inflation, exchange rates, and public purchasing power,” Susiwijono stressed. Nevertheless, the government’s steps are considered to need to be complemented with more concrete stimuli, especially to encourage weakening domestic demand. Advisory Board Member of the ITB Industrial Engineering Community Warih Andang Tjahjono assessed that strengthening the middle class’s purchasing power is key to sustaining the industry, particularly labour-intensive sectors such as automotive, textiles, and other consumer products. According to him, targeted incentives can encourage public consumption, which will ultimately create multiplier effects on state revenues through taxes. “When the government provides stimuli to the middle class to shop. Every purchase by customers involves tax, and that tax will return to the government,” he stated. In addition to boosting domestic demand, the government is urged to expand export market access by shifting focus to regions with growth potential. Warih mentioned that markets in advanced countries are currently tending to stagnate due to economic pressures and conflicts, so opportunities are opening in emerging regions. The markets in question include regions in Africa, the Middle East, South Asia, Southeast Asia, and Latin America, which are assessed to still have room for consumption growth. “Global South countries are potential markets today. Seize the market now,” Warih emphasised.