Indonesia's Manufacturing Growth in 2013 Has Not Met Target Yet
In the first quarter of 2013, Indonesia's manufacturing sector (excluding oil and gas) grew 6.69 percent (YoY). This growth figure is still far below the government's target of 9 percent growth in 2013. However, the minister of Industry, Muhammad Sulaeman Hidayat, remains optimistic that the nine percent growth target will be met in the second quarter of 2013 as production is increasing and investments have been realized. Analysts, however, expect the manufacturing sector to grow 7.14 percent this year (YoY).
According to Statistics Indonesia (BPS), a non-departmental government institute, Indonesia's middle and large manufacturing grew 8.94 percent in Q1-2013, while the country's small and lower-middle manufacturing grew 4.84 percent (YoY) in the same quarter. Growth of middle and large manufacturing is supported by the automotive and other motor vehicles industry (27.73 percent growth YoY), the bamboo and rattan industry (23.88 percent), basic metals (12.28 percent), the confection industry (9.93 percent), and the foods industry (0.30 percent). The small and lower-middle manufacturing business segment is supported by the computers and electronics industry (28.54 percent growth YoY), basic metals (20.36 percent), and leather, leather goods and footwear (5.98 percent).
Another reason why increased output in Indonesia's non-oil and gas manufacturing sector is expected in Q2-2013 is because production will usually rise ahead of the Ramadan (Islamic fasting month) and Lebaran or Idul Fitri (one of the major religious-inspired holidays in Indonesia). The festivities give rise to higher food consumption.
However, external demand for certain products (such as Indonesian textiles) has not shown a stable recovery yet due to international economic turmoil. Another issue that needs to be faced by Indonesian manufacturers is the fuel price increase that is expected to be implemented next month.
Growth in Non-Oil and Gas Manufacturing (percentage points)
| Industry | 2009 | 2010 | 2011 | 2012 |
| Food, Drinks and Tobacco | 11.22 | 2.78 | 9.14 | 7.74 |
| Textiles, Leather, and Footwear | 0.60 | 1.77 | 7.52 | 4.19 |
| Wood | -1.38 | -3.47 | 0.35 | -2.78 |
| Paper | 6.34 | 1.67 | 1.40 | -5.26 |
| Fertilizer, Chemicals, and Rubber | 1.64 | 4.70 | 3.95 | 10.25 |
| Cement and non-Mineral Quarrying | -0.51 | 2.18 | 7.19 | 7.85 |
| Basic Metals, Iron, and Steel | -4.26 | 2.38 | 13.06 | 6.45 |
| Transport Equipment, Machinery, and Appliances |
-2.87 | 10.38 | 6.81 | 6.94 |
| Other Products | 3.19 | 3.00 | 1.82 | -1.00 |