Manufacturing Outpaces Economy, Minister: Industrialisation on Right Track
Industry Minister Agus Gumiwang Kartasasmita has said that manufacturing growth of 5.32 percent year-on-year in the second quarter of 2026, above the national economic growth rate of 5.29 percent, is evidence that the country’s industrialisation policy is on the right track.
According to him, the government’s support for the industrial sector has strengthened manufacturing competitiveness while making non-oil and gas processing industry the engine of Indonesia’s economic growth.
“President Prabowo’s directive is very clear, namely to make the industrial sector the backbone of national economic growth. At the Ministry of Industry, we translate that directive through the Grand Strategy for National Industrialisation (SBIN), which focuses on strengthening industrial structure, downstreaming, increasing added value, and job creation. Alhamdulillah, the results are beginning to show with non-oil and gas processing industry growth able to surpass national economic growth,” the Minister said in a statement confirmed in Jakarta on Wednesday.
According to Agus, the success of the manufacturing sector is reflected not only in output growth but also in increasingly strong business activity. This is reflected in the Manufacturing Industry Business Condition and Prospect Index (IKBM), which stood at 52.31, indicating an expansion phase.
The positive performance is also in line with Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) at 50.2 in July 2026, as well as the Industrial Confidence Index (IKI) for July 2026 reaching 53.10, both showing industrial activity remains in expansionary territory.
The Minister explained that processing industry growth in the second quarter of 2026 was driven by the performance of several strategic subsectors. The food and beverage industry grew 6.51 percent, supported by rising demand from both domestic and export markets.
Furthermore, the metal goods, computer, electronic, optical, and electrical equipment industry recorded the highest growth at 8.04 percent, amid rising global demand for electronic components, batteries, and various electrical equipment.
Meanwhile, the chemical, pharmaceutical, and traditional medicine industry grew 4.99 percent thanks to increased domestic demand for chemicals and derivative products.
The Minister also highlighted that public purchasing power continues to show a positive trend. This is reflected, among other things, in the rising value of consumer goods imports, which grew 27.15 percent year-on-year.
According to him, the increase in consumer goods imports indicates that household consumption continues to grow.
“Growth in public consumption is a positive signal for industry because it shows domestic demand remains strong. However, we must also use the rise in consumer goods imports as momentum to accelerate the strengthening of the national industrial structure so that more domestic market needs can be met by domestic products and raw materials,” Agus said.
According to the Minister, the increase in consumer goods imports also indicates that policies protecting domestic industry, particularly the raw material supply industry, still need to be continuously strengthened.
This strengthening is needed so that national industrial capacity can meet domestic market needs more optimally, reduce dependence on imports, and deepen the national industrial structure.
Nevertheless, the Minister acknowledged that in the second quarter of 2026, the net export component still contributed negatively by 0.78 percent to economic growth.
Therefore, his ministry will continue to strengthen manufacturing competitiveness through increased productivity, downstreaming, diversification of value-added products, and expansion of export markets so that Indonesia’s trade performance becomes stronger and more sustainable.
Based on May 2026 data, the processing industry sector contributed 13.53 percent to national employment out of a total working population of 148.19 million people.
This shows that the manufacturing sector continues to create jobs and has not experienced negative employment growth.
“This is the reason why the government continues to place the manufacturing industry sector as the backbone of the economy. Besides generating added value and enhancing national competitiveness, this sector also provides employment opportunities for millions of Indonesians. Therefore, we will continue to accelerate the implementation of the Grand Strategy for National Industrialisation (SBIN) so that national industry becomes stronger, able to meet domestic market needs, while improving export performance,” the Minister stressed.
Based on data from Statistics Indonesia (BPS), the processing industry contributed 18.50 percent to gross domestic product (GDP), dominating compared to other sectors.
In addition, the manufacturing sector was the largest source of economic growth with a contribution of 0.90 percent, surpassing other business fields.